Prospects of Build Operate Transfer (BOT) Project Delivery Method for Road Infrastructure: A Case Study Karachi-Hyderabad Motorway M-9

Abstract

Better infrastructure network and related services are very much required for flourishing and sustainable economic growth of any country along with social development in human relations. On the other hand, the third world countries have inadequate available capital to be assigned on principal expenditures and stretched out public services. To reduce the bridge between existing public funding and the expenditure on required infrastructure, public authorities are increasingly turning to Build Operate Transfer (BOT). In Pakistan, privatization process of roads falls under National Highway Authority with no vast experience in BOT infrastructure. Expansion and rehabilitation of Karachi – Hyderabad Motorway (M-9) of 136 Km length was awarded to Standard Construction Company in 2006, at the cost of Rs 7 billion and concession period of 25 years, however the project could not take off due to misunderstandings on financial closure between the client and the developer. After a gap of five years same project with similar specifications has now been awarded to Malaysian firm Binapuri Holdings at the cost of Rs 24.93 billion and concession period of 28 years. Failure to execute such attractive projects indicates that the investors are not getting the anticipated response and planned turnover from the public authorities and simultaneously the public agencies are also facing problems in supporting the guarantees thus increasing the risk factor on the limited budget of a developing country. These situations are required to be evaluated to judge the suitability for the planned potential project. For this purpose an already designed template by Dr. Bing Li (School of Built and natural environment Glasgow Caledonian University) was selected for judging the potential Build Operate Transfer projects. The template consisted of two groups of factors, each of positive and negative. An opinion of different categories of construction industry participants on Build Operate Transfer was developed by circulating the template as a survey questionnaire among them for the ranking purpose, later the ranked values of each factor were applied on ranking of Karachi – Hyderabad Motorway (M-9), given by the General Manager of Build Operate Transfer Cell at National Highway Authority, thereby formulating an evaluation model for assessing the suitability of a understudy project. The results obtained from the model equation were unanimously favorable for the Build Operate Transfer method of project delivery in respect of Karachi – Hyderabad Motorway (M-9). Same template had also been applied by Dr. Cheung E. and Albert P. C. Chan in 2007, during BOT Analysis of Hong Kong Zhuhai Macau Bridge of 29.6 Km, planned to be completed by 2015-2016 and costing 37.4 billion (RMB) worth of 6 billion US $, however found unsuitable for private procurement method. The Government of Pakistan (GOP) has launched various BOT projects in the last decade in order to protect its financial liabilities and to inject the finance from private sector, for this purpose the study recommends development of a conducive environment for private investment which requires bureaucratic support, political will, public acceptance and acceptable profit. Independent suitability analysis for all potential BOT projects should be carried out at regular intervals by the government and the result of the evaluation model worked out would be able to help both the public and private sectors to assess whether potential public projects are suitable for BOT or otherwise.