Build operate transfer model for new power plants for Turkey

This paper describes and analyzes the Turkish Build-Operate-Transform (BOT) model for electric power projects. The BOT procedure was created for financing and implementing public projects through the involvement of the private sector, thus reducing the financing issues without increasing the external debt. The BOT procedure for formulating and evaluating projects is a rather new tool for governmental decision making. Given the limitation of resources, choices must be made among competing uses of resources based on the extent to which they help the country to achieve its fundamental objectives. One of the well known methods of presenting this choice between competing uses of resources in a suitable and comprehensible fashion is called Social Benefit Cost Analysis (SBCA). The paper provides a comparison of the results obtained by evaluating the same hydro-electric power project by both BOT and SBCA procedures and tries to explore under what assumptions the two procedures lead to diverging conclusions. What is revealed from this exercise is that, the decisions whether a BOT project is beneficial or not, are highly sensitive to the basic assumptions about the discount rate in calculating the present worth of costs and benefits, the concession period for the operation of the plant, and the guarantees provided by the government to the joint venture undertaking the project