1 thought on “What does bot mean in the International Investment Law?”

  1. What is bot

    What is BOT

    1, infrastructure franchise
    bot is the abbreviation of English built -operate -transfer, usually literally translated as "construction -operation -transfer transfer "". This translation method is straightforward, but it cannot reflect the essence of BOT. BOT is essentially a way for infrastructure investment, construction and operation. The premise of reaching an agreement between the government and the private institution will be issued by the government to the private institution. Manage and operate the facility and its corresponding products and services. The government can restrict the number and price of public products or services provided by the agency, but ensure that private capital has the opportunity to gain profits. The risks of the whole process shall be shared by the government and private institutions. At the end of the franchise period, private institutions transfer the facilities to government departments as agreed and transfer to the designated department of government departments to operate and manage. Therefore, the word BOT is more suitable for "infrastructure franchise".
    The above concepts described in the narrow sense. BOT has gone through hundreds of years of development. In order to adapt to different conditions, many variants have been derived, such as Boot (Build -OWN -operate -Transfer), Boo (Build -OWN -Operate), BLT (Build -Lease -Perate), and TOT (Transfer -Peraate -Transfer) and so on. BOT concepts in the broad sense include these derivative varieties. What people usually call BOT should be a broad BOT concept. The term "construction -operation -transfer" cannot summarize the development of BOT models.
    2, the history of BOT
    In recent years, the investment and construction methods of BOT have been used by some developing countries for its infrastructure construction and achieved a certain success. As a new way of investment, BOT is far from a new thing. It has been at least 300 years since its appearance.
    17th century British Pilotry Association is responsible for managing maritime affairs, including construction and operation lighthouse, and has the privilege of building lighthouse and charging to ships. However, according to R. COASE survey, from 1610 to 1675, the Port Association has not even been completed. There are at least ten private lighthouses built in the same period. The investment method of this private lighthouse is exactly the same as the so -called BOT. That is, the private person first submits an application for the government's allowance to build and operate the lighthouse. The application must include the signatures of many ship owners to prove that the lighthouse they will be built will be beneficial to them and expressed their willingness to pay the toll. The land that must be occupied by the rental lighthouse must be occupied, the lighthouse is managed during the franchise period, and the toll is charged to the past ships; after the privilege period expires, the government will recover the lighthouse and hand over the Hong Kong Association to manage and continue to charge. By 1820, 34 of the 46 lighthouses were built privately. It can be seen that the BOT model is much higher than the administrative department in terms of investment efficiency.
    The fate with many other innovations, BOT experienced a period of obscurity after its birth. And this period of obscurity is so long for BOT, so that people have almost forgotten its early performance. Until the 1980s, when the BOT was held on the economic stage due to the needs of economic development, many people regarded it as a new thing.
    3, the characteristics of BOT
    The contemporary capitalist countries introduced strong state intervention on the basis of the market economy. At the same time, economics also affirmed the role of "visible hands", and the market economy gradually evolved into a hybrid economy combining markets and plans. BOT has the characteristics of a combination of this market mechanism and government intervention.
    , on the one hand, BOT can maintain the market mechanism. Most of the economic behavior of the BOT project is carried out in the market. The government determines that the project company's approach also contains the competitive mechanism. As a reliable market entity, the private institution is the main body of the BOT model, and has complete property rights for the projects built during the franchise period. In this way, the behavior of private institutions that undertake the BOT project in the implementation of the BOT project fully meets the assumptions of economic people.
    On the other hand, BOT provides effective ways for government intervention. This is an agreement on BOT reached with private institutions. Although the execution of the BOT protocol is all responsible for the project company, the government has controlling the project from beginning to end. In the three stages of projects, bidding, and negotiations, the government's wishes play a decisive role. During the performance stage, the government has the power to supervise and inspect, and the formulation of prices in project operations is also subject to the government. The government can also restrict the behavior of the BOT project company through the general BOT law. rnrnBOT的运作方式和风险分担rnrn1、BOT的主要参与人rn一个典型的BOT项目的参与人有政府、BOT项目公司、投资人、 Banks or consortia, as well as related companies that be responsible for design, construction and operation.
    The government is the control body of the BOT project. The government decides whether to set up this project and whether to use BOT. The government also occupies a favorable position when the negotiations determine the contract contract for the BOT project agreement. It also has the right to supervise the necessary links during the project. When the project franchise expires, it also has the right to recover the project without compensation.
    The owner is the main body of the BOT project, which is in the central position. All the owners are responsible for all the fundraising, subcontracting, construction, acceptance, business management system, and debt repayment and repayment of the BOT projects. Large infrastructure projects usually set up project companies as owners, and deal with design companies, construction companies, manufacturers, and business companies.
    The bank or group is usually the main investor of the BOT project. For small and medium -sized BOT projects, generally a single bank is enough to provide all the funds they required, and large BOT projects often make a single bank feel unsatisfactory, which forms a lending loan. Because the liability ratio of BOT projects is generally as high as 70-90 %, loans are often the largest source of funds for BOT projects.
    Ist investors are the main body of the risk of BOT projects. They undertake limited liability with their investment. Although the government and private institutions share risks in principle, in fact, countries are very different in operations. The risks of developed market economy countries in BOT projects are very small, and developing countries often bear a large proportion of risks in multinational BOT projects.
    2, the implementation process of BOT projects
    bot mode is mostly used for projects with large investment quotas and long term. Since the establishment of a BOT project to the expiration period, there are often more than ten or decades. This article divides the entire period into five stages: project, bidding, bidding, negotiation, and performance.
    The project. At this stage, the government lists the list of new construction and reconstruction projects based on medium and long -term social and economic development plans and is publicly public. Private institutions can make reasonable plans to contact the business development direction of the agency based on the project on the list, and then make suggestions to the government to build a project by BOT, and apply for bidding or indicate the intention of the project. The government relies on the feasibility study of various plans by consulting agencies, and decides how to adopt the technical and economic indicators of each plan.
    The bidding stage. If the project is determined to be constructed by BOT, the government or its entrusted agency will first issue a bidding advertisement, and then qualify for the registration of the private institutions to qualify. Several private institutions are selected as the bidders and the bidding documents are sold to them.
    The projects that determine the construction of BOT can also directly negotiate with private institutions with the intention of project intention. However, the success rate of the negotiation method is not high. Even if the negotiation is successful, the government agreed to increase the cost of the project due to the lack of competition.
    The bidding stage. The BOT project labels have been prepared for a long time, often more than 6 months. During this period, institutions entrusted by the government should answer the issues raised by the bidders at any time and consider reasonable suggestions made by the bidder. The bidder must submit the bidder to the bidder before the specified date. After the bidder is opened, the bid evaluation, and sorting, the first 2-3 houses are selected for negotiation.
    The negotiating phase. The franchise contract is the core of the BOT project. It has legal effect and is effective throughout the franchise. It stipulates that the power and obligations of the government and BOT project companies determine the risks and rewards of both parties. Therefore, the negotiation of the franchise contract is a key part of the BOT project. The bidder entrusted by the government will negotiate with several bidders in turn. Success signed a contract, and unsuccessful turned to the next bidder. Sometimes negotiations need to be carried out.
    The performance stage. This stage covers the entire franchise period, which can be divided into construction phase, operation phase and transfer stage. The owner is the protagonist of this stage and undertakes a lot of work to perform the contract. What needs to be pointed out is that a good franchise contract can motivate owners to seriously supervise and build and operate participants, and strive to reduce costs and efficiency.
    3, risks in BOT projects
    English risk (RISK) refers to a certain degree of uncertainty of the future situation. The actual situation in the future may be worse than expected, but it may also be better than expected. The term "risk" is not a disadvantage, but stable investors pay more attention to avoiding adverse situations.
    bot project investment is large, the term is long, and the conditions are large. It is often unprecedented to follow, so the risk of bot is greater. The avoidance and sharing of risks have become an important part of the BOT project.
    bot projects may have five types of risks throughout the process: political risks, market risks, technical risks, financing risks, and non -resistant external force risks.
    political risk. The political situation is unstable, and the social irregularities will bring political risks to the BOT project. This risk is specially considered by the BOT project company of multinational investment. The political risk undertaken by investors increases accordingly with the extension of the project period, and for investors in the country, the risk factors are rarely considered.
    market risk. During the long franchise period of the BOT project, the supply and demand relationship changes and price changes occur. Before the BOT project recycling all the investment, more cheaper competitive products may occur in the market, or more popular replacement products, so that the demand for the output of the BOT project is greatly reduced, which is the market risk. Generally, the investment of BOT projects is long and the period is long, and the government is required for the assistance and franchise of the government. In addition, it is another market risk in the raw material market due to raw material price increases. This is another market risk.
    The technical risk. During the BOT project, the risks caused by improperly arranged systems in the system are called technical risks. One manifestation of this risk is delay. Project extension will directly shorten the project operation period, reduce engineering returns, and seriously may cause the project to abandon the project. Another situation is engineering defects, which refers to the remaining issues in the construction process. This type of risk can reduce the possibility of occurring through technical treatment in institutional arrangements.
    financing risk. Due to the risks brought about by the expected changes in exchange rates, interest rates and inflation rates, it is a financing risk. If an inflation that is higher than expected, the price of the bOT project (if the expected price is agreed) will be low; if the interest rate rises, the financing cost of the BOT project will be greatly increased due BOT is often used for multinational investment, and the difficulty of changes in exchange rates or cash will also bring risks to the project.
    Inight risk of external force. BOT projects, like many other projects, have to bear the risks of unavoidable and unpredictable external forces such as earthquakes, fires, rivers and heavy rain.
    4, the avoidance and sharing of BOT risks
    The mechanism of risk should be two. One mechanism is to avoid, that is, the probability of reducing the adverse situation with certain measures; another mechanism is to sharing, that is, the distribution scheme of losses under the situation of unfavorable situations in advance. This is an important part of the BOT project contract. The international practice of sharing risk between participants is: who can control the risks that can control the risks.
    In avoidance of political risk. The BOT project company of multinational investment first must consider political risk issues. And this risk is difficult to evaluate the experience of economists and economists. The project company can partially offset political risks in the negotiations to partially offset political risks. If project capital accounts are opened outside the project country. In addition, the United States' OPIC and the British Export Credit Guarantee Department (ECGD) provide guarantee for the political risks of transnational investment of domestic companies.
    The sharing of market risk. In the market economy system, the market risks brought by the emergence of new technologies should be borne by the project sponsor and determined person. If the project is initiated by a private institution, this part of the market risk shall be borne by the project company; if the project is determined by the government development plan, the government is mainly responsible. The risk of engineering overruns should be made by the project company, and it should be prepared when the BOT project contract is signed.
    The avoidance of technical risk. The technical risk is caused by the fact that the project company is not strictly restrained or in poor supervision when the project subcontracting with the contractor, so the project company should be fully responsible. Regarding engineering extension and engineering defects should be provided in the subcontracting contract, which is linked to the economic interests of the contractor. The project company should also leave a part of the maintenance deposit or the quality margin after construction in addition to the project cost to solve the problem of engineering defects smoothly. For control engineering that affects the progress of the entire project and the overall quality of the relationship, the project company should also conduct more frequent supervision.
    The avoidance of financing risk. Engineering financing is an important part of the running through the BOT project. This process is operated by the project company as the main body, and the risk is completely borne by the project company. Financing skills have a great impact on project costs. First of all, the funds investing step by step in the project should be integrated step by step, otherwise the financing cost will be greatly increased. Secondly, the effect of interest rates and inflation fluctuations on the cost of agreed products on the agreed product price. If you introduce foreign -funded BOT projects from abroad, the expectations of currency exchange and exchange rates should be considered. Do not resist the sharing of external force risks. This risk has an uncertainty of unpredictable and losses, and it may be devastating losses. Both the government and private institutions have power. This can rely on insurance companies to bear some risks. This will inevitably increase the cost of engineering, and often requires multiple insurance companies for large -scale bOT projects. Government and project companies in the project contract should also agreed to the method of sharing the risk.
    In all, in the market economy, the government can share the risks of non -resistance to external forces in BOT projects, ensure currency exchanges, or bear exchange rate risks. Other risks are borne by project companies.
    BOT projects in Western countries have two special trends worthy of Chinese development BOT projects. One is to vigorously adopt domestic financing methods. One of its advantages is to completely avoid the exchange rate risks that are particularly prominent at government risks and contemporary floating exchange rates. Another trend is that the government has less risks. Of course, this depends on the role of market mechanism and the sound of economic regulations. In this sense, the way to promote BOT does not rely on government commitments, but to deepen the reform of the economic system and strengthen the legal system.

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