Mend but don't end BOT model for projects: experts

The government should come up with a more effective supervisory mechanism for build-operate-transfer (BOT) projects, in order to regain the public's confidence in the model, experts said yesterday.

Their comments came after the recent public uproar over the implementation of the BOT system in Taiwan, following the Kaohsiung rapid transit system scandal and the money-sucking high-speed rail project. Both projects were designed under the BOT model.

Their remarks were also noteworthy in light of comments earlier this week from Minister of Transportation and Communications Lin Lin-san (林陵三) , who said flatly, "It's improper for Taiwan to carry out BOT projects at the moment."

Given the bumpy experience of BOT projects, Lin suggested on Monday at the legislature's Transportation and Communications Committee that future BOT projects be nixed. But his remarks were overruled on Wednesday by his boss, Premier Frank Hsieh (謝長廷), who said that the government will continue to use the BOT business model.

Lin's disappointment was understandable, the experts said. BOT projects are supposed to improve cost efficiency for the government, but the government has paid enormous sums to take over the high speed rail project to ease private contractor's funding difficulties, and the Kaohsiung rapid transit project has reportedly had ballooning construction costs due to circumvention of the Government Procurement Law (政府採購法).

Kuo Yao-chi (郭瑤琪), chairwoman of the Cabinet's Public Construction Commission, which oversees BOT projects, explained that the uproar over the KRTS and high-speed railway projects were due to a lack of specific regulations on government procurement and government financing in the Statute for Encouragement of Private Participation in Transportation Infrastructure Projects (獎勵民間參與交通建設條例).

When the government invited private sector firms to bid for the high-speed rail in 1997 and the KRTS project in early 1999, both the government and private sector were subject to the regulations set by this Statute. The Government Procurement Law was passed in late 1999.

Aiming to set clearer guidelines for risk allocation on public-private projects, the government passed the Statute for Promoting Private Participation in Public Construction (促進民間參與公共建設法) in 2000, which Kuo said has helped solve government procurement and financing problems. Kuo added that BOT projects that have operated under the new statute have so far met expectations.

"The effort is still not enough," said Ho Shih-ping (荷世平), an associate professor at National Taiwan University's Department of Civil Engineering, who has studied private participation in public projects for years. "The government should establish a mechanism to supervise the BOT projects."

Tsai Tui (蔡堆), vice chairman of the Public Construction Commission, echoed those remarks, saying that a better mechanism is needed to clear up the public's misconceptions about BOT projects.

To emerge from what he called a "lame BOT system," Ho suggested that the Ministry of Finance should also be the administrator of the projects, and be involved in both budgeting and inspecting implementation.

James Ku (古嘉諄), a senior partner at Formosan Brothers Attorney-at-Law (寰瀛法律事務所) who consults on several BOT projects, said that the government should employ professional financial consultants to study the feasibility of financing plans, as is the practice in other countries, Ku said.