INTRODUCTION

The host country for a project is involved, knowingly or unwittingly, from the start of project planning. Governmental involvement can take many forms, ranging from enacting laws that regulate a project to ones that encourage sector reform, such as through private development, build-own-transfer (BOT) structures, or privatization. In the operation stage of a project, government involvement continues, through varying levels of continuing regulation for some projects, and even non-regulation for others.

Infrastructure projects – roads, railways, ports, energy production, hospitals, and airports – heighten the interest and involvement of the government in the project's development, construction, operation, and financing. Projects less tied to the country's infrastructure needs, such as industrial projects, may involve government interest and cooperation, but often at a less significant level. Even industrial projects sometimes attract governmental interest beyond job creation and tax revenue, such as in projects where a government-controlled fuel company will supply project fuel.

The interest level of the host government in a project will affect its ability and commitment to execute support agreements for the project; institute sector reforms, such as privatization; and enact legislation needed to make a project feasible. In this chapter, the processes governments use to solicit private-sector interest, and the procedures and agreements typically used by governments to support the development of projects and encourage foreign investment, are explained.