Security legislation: This legislation is meant to legally protect the security package of the project. The security package includes security of lenders assets against land mortgages, interest on loan, inventory & equipments. In addition to this, additional kinds of security measures are also included in project agreements such as offshore revenue and retention accounts, performance undertakings from government of the public agency obligations, assignment of various contracts to lenders, lenders' rights to cure any defaults by Project Company within reasonable time, right to take over the project and assurance of equity owners' stock. This security package is normally designed to safeguard the interests of the financial institutions extending debt financing to projects. Though separate legislation has not been enacted for PPP projects in India but similar provisions to ensure security to lenders are included in Model Concession Agreements (MCAs) developed by Government of India for various sectors. The MCAs provide for collateral of concessionaire' assets other than the specific project assets and assignment of rights and obligations covered by the substitution agreement as per which lenders could substitute a defaulting concessionaire.
Legislation to promote Foreign Direct Investment (FDI): Most developing countries have enacted foreign investment codes to encourage and facilitate FDI. This legislation deals with FDI related issues like; right to exchange local currency into foreign currency; free transfer of funds abroad of foreign currency; full repayment of loans and investment compensation upon any government-mandated transfer of a project before the end of the project period; right to bring in foreign nationals needed for construction, operation and maintenance; right of foreign investors to establish companies in the host country; and tax regimes for foreign investment.
General business legislation: The general business legislations are legislations that are not directly related to BOT but supportive to BOT. Ideally, countries general business legislation should be compatible with government BOT objectives. The general business legislation includes laws protecting property rights (ownership of land & project facilities); laws providing protection of property rights against expropriation and nationalisation; law for contract enforceability; bankruptcy legislation, corporate laws for private ownership of public facilities; legislation on leasing and franchising, and environmental and labour laws.
Special legislation: In certain countries, special legislation to address the specific needs of BOT projects is enacted. This special legislation addressed most of the legal issues relating to BOT projects procurement, such as authorization; required government approvals; preferential tax treatment; procurement issues and framework for BOT project agreements. Governments enact such special legislation with the intention to send out a clear and positive signal to potential investors of the government's commitment to develop BOT projects; foreign investors able to find main legal provisions with relative ease and in one place; readily available answers to essential issues; and legal effects to support and incentives to be provided by governments. Countries such as Indonesia, and Philippine have enacted special BOT laws to motivate private sector participation in infrastructure development. Similarly, some of the states in India have enacted special legislation for infrastructure development. For instance, Government of Andhra Pradesh enacted the Andhra Pradesh Infrastructure Development Enabling Act, 2001 to provide for comprehensive legislation and reduce administrative and procedure delays in rapid development of physical and social infrastructure in the state and attract private sector participation in design, financing, construction, operation and maintenance of infrastructure projects in the state.