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http://dx.doi.org/10.12652/Ksce.2010.30.3D.295

A Study on Risks in China's Foreign Invested Water BOT Projects  

Lee, Seungho (고려대학교 국제대학원)
Choi, Jae-Ho (동아대학교 토목공학부)
Publication Information
KSCE Journal of Civil and Environmental Engineering Research / v.30, no.3D, 2010 , pp. 295-302 More about this Journal
Abstract
Since the late 1990s, the BOT mode in China has been extensively used in the water sector in order to attract private investment, improve technical and operational efficiency, and expand the coverage of water services. The BOT mode has been hailed as this provides a win-win structure between the government and private players through formalized procedures and an optimal risk allocation. However, recent market analyses show that some foreign investors are reluctant to participate in the market or even retreat due to uncertainties and risks in the market. This study aims to explore various risks in the Chinese water BOT market based on the thorough literature review, fieldwork, and the case studies on the two wholly foreign-owned BOT water projects: the Chengdu No. 6 and the Shanghai Dachang Water Supply BOT projects. The research results indicate that the Chinese BOT market embraces high risks in political, institutional and legal, and financial systems. The key to a successful takeoff of the BOT mode in the Chinese water market depends on the extent to which the government will be able to remove risky factors in political, institutional and legal, and financing systems. This research outcome will provide a useful reference to the Korean construction companies which consider expanding business to overseas water markets in the form of public private partnership.
Keywords
China; water sector; foreign invested BOT projects; Chengdu No.6 water supply BOT project; Shanghai Dachang water supply BOT project; risks;
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