Build operate and transfer (BOT) or build own operate and transfer (BOOT) is a type of arrangement in which the private sector builds an infrastructure project, operates it and eventually transfers ownership of the project to the government. These project components are procured from the private sector in a single contract with financing secured by the public sector. During the period, the private sector has the responsibility to raise the finance for the project and is entitled to retain all revenues generated by the project and is the owner of the regarded facility. The end of concession agreement the private sector will transferred the facility to the public administration.
Advantages and disadvantages of build operate and transfer
…show more content…
The concession was awarded to Kuala Lumpur-Kuala Selangor Expressway Berhad (KLKSEB) in 1997 through BOT scheme arrangement but due to the Asian Financial Crisis in 1997, the project did not took off until it was revived in 2008 with a new supplemental agreement signed with the government (Arulampalam, 2011). Construction of the highway started in 2008 and it was completed and opened to public on 23rd of June 2011. Toll collection for the highway officially started on 1st September 2011 after being toll free right after it opened. The 33 kilometer highway is linking Kuala Lumpur and Kuala Selangor district and its development was aimed as an alternative and to reduce traffic congestion on federal route number 54 with the concession period of 40 years14. The highway is a green field project of developing dual lane, at grade expressway and its development was initiated by the concession company (unsolicited proposal).
The highway was built at the cost of RM 958 Million. The highway development was financed by domestic and foreign funding in the form of RM 1.04 Billion total loan secured from Malaysian Development Bank and Islamic Development Bank (Arulampalam, 2011). The traffic volume projection for the highway for the year 2011 was 60,000 vehicles daily (Jayaraj, 2011). However, after the commencement of toll collection, the actual traffic volume was 30,000 vehicles daily (Idris, 2011).
The concession agreement (CA) for this highway dictated that the land acquisition