Is BOT the best financing model to procure infrastructure projects?. A case study of the Hong Kong‐Zhuhai‐Macau Bridge
| DOI | https://doi.org/10.1108/14635780910951984 |
| Pages | 290-302 |
| Date | 24 April 2009 |
| Published date | 24 April 2009 |
| Author | Esther Cheung,Albert P.C. Chan |
| Subject Matter | Property management & built environment |
PRACTICE BRIEFING
Is BOT the best financing model to
procure infrastructure projects?
A case study of the
Hong Kong-Zhuhai-Macau Bridge
Esther Cheung
School of Urban Development, Faculty of Built Environment and Engineering,
Queensland University of Technology, Brisbane, Australia, and
Albert P.C. Chan
Department of Building and Real Estate,
The Hong Kong Polytechnic University, Kowloon, Hong Kong
Abstract
Purpose – Several major infrastructure projects in the Hong Kong Special Administrative Region
(HKSAR) have been delivered by the build-operate-transfer (BOT) model since the 1960s. Although the
benefits of using BOT have been reported abundantly in the contemporary literature, some BOT
projects were less successful than the others. This paper aims to find out why this is so and to explore
whether BOT is the best financing model to procure major infrastructure projects.
Design/methodology/approach – The benefits of BOT will first be reviewed. Some completed
BOT projects in Hong Kong will be examined to ascertain how far the perceived benefits of BOT have
been materialized in these projects. A highly profiled project, the Hong Kong-Zhuhai-Macau Bridge,
which has long been promoted by the governments of the People’s Republic of China, Macau Special
Administrative Region and the HKSAR that BOT is the preferred financing model, but suddenly
reverted back to the traditional financing model to be funded primarily by the three governments with
public money instead, will be studied to explore the true value of the BOT financial model.
Findings – Six main reasons for this radical change are derived from the analysis: shorter take-off
time for the project; difference in legal systems causing difficulties in drafting BOT agreements; more
government control on tolls; private sector uninterested due to unattractive economic package; avoid
allegation of collusion between business and the governments; and a comfortable financial reserve
possessed by the host governments.
Originality/value – The findings from this paper are believed to provide a better understanding to
the real benefits of BOT and the governments’ main decision criteria in delivering major infrastructure
projects.
Keywords Financing, Financialmodelling, Procurement, Hong Kong
Paper type Case study
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1463-578X.htm
This work was fully supported by a grant from the Research Grants Council of the HKSAR,
China (RGC Project No. PolyU 5114/05E). Sincere thanks goes to those industrial practitioners,
who have kindly participated in the interviews reported in this paper. Also, Queensland
University of Technology is gratefully acknowledged for offering a QUT International Doctoral
Scholarship to the first author of this paper for her PhD study.
JPIF
27,3
290
Received September 2008
Accepted November 2008
Journal of Property Investment &
Finance
Vol. 27 No. 3, 2009
pp. 290-302
qEmerald Group Publishing Limited
1463-578X
DOI 10.1108/14635780910951984
To continue reading
Request your trial