In response to both the low quality of services provided in most developing countries and the budget constraints faced by governments, the private sector is increasingly involved in infrastructure. In this paper, the scope is limited to the concession form of private sector involvement in infrastructure, and more specifically the BOT arrangement. However, financing a new infrastructure project may be a risky undertaking. The purpose of the paper is to analyze financing issues in the context of risk.
To this end, the paper first discusses the various financing sources available, then examines the main risks to which project financiers may be exposed and ways to mitigate them.