An investigation of Chinese BOT projects in water supply: a comparative perspective

Abstract

China has used the Build–Operate–Transfer (BOT) delivery method since the early 1980s. However, there has been a varying degree of success achieved through the use of this method aimed toward the increased development of economic infrastructure projects. The Chinese government continues to shift and revise their delivery approach on BOT projects to maintain public welfare and improve the potential for project success based on lessons learned from practice. Private sponsors accordingly design or adjust their strategies to survive and succeed in this turbulent market environment.

Three representative BOT water projects in China were compared to provide both descriptive and predictive insights to both public and private parties involved in water BOT projects in China. Critical lessons were drawn from government initiatives in project institutional settings regarding government support, procurement method, tariff formulae, approval system, and dispute resolution process. Four generic strategies used by private sponsors were identified through these case studies including cost leadership, transaction size maximization, localization, and involvement of multilateral financial organization.

Keywords:

• Build–Operate–Transfer (BOT)
• water sector
• China
• governmental initiatives
• strategy