Contract, BOOT

A particular type of contract in which one party builds, owns, operates and transfers [BOOT] an asset to a customer. The benefit for the customer is that they can gain ultimate ownership of the asset and finance the asset by assigning economic rights to the contractor, who builds and operates the asset, for a finite period of time. As an example, a government may wish to build a new bridge across a river, but not have enough funds to pay for the bridge. Instead, it could award a contract to an operator to design, build and operate the bridge for a period of time, for example 25 years. During that time, the operator would have the right to levy a toll on bridge users who would not only pay for the bridge, but also earn the operator a profit. At the end of the period, the operator would transfer ownership of the bridge to the government, which could then continue the tolls, or make the bridge free, according to its circumstances. See also Public Private Partnership.