While huge investment in infrastructural plans is an urgent need for developing countries, they are not able to provide sufficient capital to fund these projects. One of the new ideas to solve this problem is to use build - operate - transfer (BOT) contracts. This method enables the private sector to participate in public, infrastructural projects without being the permanent owners thereof. The Iranian government has recently shown interest in using BOT contracts for the purpose of privatization, foreign investment attraction, access to advanced technology and technical skills, and benefiting from efficient management. As an example, paragraph 14(6) of the Economic Improvement Plan of the Islamic Republic of Iran, promulgated by the President last year, has emphasized the entry and attraction of foreign investment through BOT contracts.
The paper attempts first to study the mechanism of such contracts and then to distinguish it from similar mechanisms while explaining BOT contracts characteristics in order to facilitate their application in infrastructural projects and in privatization, technology and know-how attraction and access to efficient management