Type

Description

Selected responsibilities & Risks born by operator

Sub-type

Characteristics

Greenfield

Build, lease and transfer (BLT)

The private sponsor builds a new facility largely at its own risk, transfers ownership to the government, leases the facility from the government and operates it at its own risk up to the expiry of the lease.

The government owns the facility once it has been built and usually provides revenue guarantees or minimum traffic revenue guarantees to the private sponsor.

A private entity or a public-private joint venture builds and operate a new facility for the period specified in the project contract. The facility may return to the public sector at the end of the concession period.

Responsibilities:

Employing staff, operating and maintaining the utility, financing and managing investment.

Risks:

Operating, commercial and investment-related risks.

Build, operate and transfer (BOT)

The private sponsor builds a new facility at its own risk, operates the facility at its own risk, and then transfers the facility to the government at the end of the contract period. The private sponsor may or may not have the ownership of the assets during the contract period.

The government may or may not own the asset during the contract period but does not own it at the end of the contract period. It usually provides revenue guarantees or minimum traffic revenue guarantees to the private sponsor.

Build, own and operate (BOO)

A private sponsor builds a new facility at its own risk, then owns and operates the facility at its own risk. Ownership remains with the private sponsor.

The government does not own the asset and usually provides revenue guarantees or minimum traffic revenue guarantees.

Merchant

A private sponsor builds a new facility in a liberalised market. The private developer assumes construction, operating, and market risk for the project.

The government provides no revenue guarantees.

Rental

A private sponsor places a new facility at its own risk, owns and operates the facility at its own risk during the contract period.

The government usually provides revenue guarantees through short-term purchase agreements such as power purchase agreement.

Concessions

A private entity takes over the management of a state-owned enterprise for a given period during which it also assumes significant investment risk.

Responsibilities:

Employing staff, operating and maintaining the utility, financing and managing investment.

Risks:

Operating, commercial and investment-related risks.

Rehabilitate, operate and transfer (ROT)

Rehabilitate, lease or rent, and transfer (RLT)

Build, rehabilitate, operate and transfer (BROT)

A private sponsor rehabilitates an existing facility, then operates and maintains the facility at its own risk for the contract period.

A private sponsor rehabilitates an existing facility at its own risk, leases or rents the facility from the government owner, then operates and maintains the facility at its own risk for the contract period.

The ownership remains with the government during and after the contract period.

A private developer builds an add-on to an existing facility or completes a partially built facility and rehabilitates existing assets, then operates and maintains the facility at its own risk for the contract period.

Management Lease & Contracts

A private entity takes over the management of a state-owned enterprise for a fixed period while ownership and investment decisions remain within the state.

Responsibilities:

Providing management services to the utility ((management contract); Employing staff and operating and maintaining the utility (lease contract).

Risks:

Amount of performance bonus (management contract); operating and commercial risks (lease contract).

Management contract

The government pays a private operator to manage the facility.

The ownership, investment decisions and operational risk remain with the government.

The private operator takes on the operational risk.

The government leases the assets to a private operator for a fee.

Lease contract

Diversitures

A private entity buys an equity stake in a state-owned enterprise through an asset sale, public offering, or mass privatisation programme.

Responsibilities:

Employing staff, operating and maintaining the utility, financing and managing investment.

Risks:

Operating, commercial and investment-related risks.

Full Partial

The government transfers 100% of the equity in the state-owned company to private entities.

The ownership is fully and permanently transferred to the private partner.

The government transfers part of the equity in the state-owned company to private entities.

The ownership is mixed; only a minority stake in state-owned company is divested.