Modeling Depreciation Costs and BOT Concession Period

摘要

Recently an innovative BOT concession model (BOTCcM) was developed to quantitatively determine the value of a concession period. The model could propose an interval for possible negotiations between a host government and a private investor. Nevertheless, this paper identifies a major limitation of this model. Depreciation is a regular cost. However, this cost was not considered in the analysis of the BOTCcM. This study extends the BOTCcM by including project depreciation costs during the analysis of the project post-transfer operation period. The application of the new model is demonstrated using the same example case quoted in the BOTCcM and shows that a significant different decision is made when project depreciation costs are considered.