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One thing that I don't understand is the US' reluctance to practice what they preach. Most infrastructure projects abroad that have US involvement (financing, for instance) are mandated to be built out under a build, own, operate, transfer (BOOT) or build, operate, transfer (BOT) model. Private companies contract to build and operate the system as a monopoly for x number of years; in exchange, they get certain guarantees regarding revenue sharing and contracts awarded to competitors or what-have-you. The US insists on this sort of tendering out to private corporations extensively in projects financed bilaterally or multilaterally internationally, yet refuses to implement the same sort of systems domestically.

For example, the construction and operation of the Delhi Metro was contracted to the Delhi Metrorail Corporation, a majority privately held company, for 99 years, under a revenue sharing agreement and about 30% of the construction was financed via low-cost loans from the federal government; other portions of it were financed by buying up land along the path of the Metro at a low price and selling it at a higher price once the Metro route was finalized. In exchange, DMRC has committed to the construction of the Delhi Metro on behalf of the federal government and the states of Delhi, Haryana and Utter Pradesh (which jointly own the physical track, equipment, and rolling stock), to certain minimum standards of service, and maximum fare increase ceilings. DMRC is profitable without needing further government subsidies. Now you can argue all you want that the pricing structure is very different for India and the US but considering the differences in income, transit on the Delhi Metro is almost identically priced as a portion of income as transit on WMATA is.

So, shouldn't the governments of DC, VA and MD at least consider the BOOT model for further transit? Seems to work in countries around the world where neither the law nor enforcements of contracts are as well developed as in the US.

by varun on Feb 8, 2010 7:01 pm • link • report

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