The escalating *maintenance costs in heavy industries—including the oil and gas sector—are widely recognized. As facilities age, these costs inevitably rise. Annual data on corrosion‐related expenses, combined with production shutdowns caused by both planned and unplanned maintenance, clearly demonstrate the need for substantial capital expenditure. Moreover, the 14.5% revenue share allocated to the National Iranian Oil Company (NIOC) is insufficient to sustainably finance these growing requirements.
In such circumstances, many countries have adopted proven Public–Private Partnership (PPP) structures such as ROT and MOT to rehabilitate, modernize, and revive aging industrial infrastructure.
Rehabilitate – Operate – Transfer (ROT)
An ROT contract is a framework under which the government engages the private sector to rehabilitate or restore one of its partially completed or underperforming industrial assets—either a facility that has never reached commercial operation or one producing significantly below its nameplate capacity.
Under this model:
Rehabilitation is financed by the private partner or a financial institution. The investor is granted exclusive operating rights for a defined period to recover its capital and earn a reasonable return.
Capital recovery may follow two mechanisms:
1. User-Pay Scheme (e.g., toll road charges), or
2. Government-Pay Scheme (e.g., government purchases the future output of a power plant at a pre-agreed tariff to cover capital and returns).
At the end of the agreed term, the asset is transferred back to the government in an improved and operational state.
Modernize – Operate – Transfer (MOT)
The MOT structure follows a similar contractual logic but is applied not to incomplete facilities, but to existing older industrial units requiring technological upgrades.
In this arrangement:
The government contracts with a private entity to *modernize the facility and enhance its operational efficiency.
After modernization, the private partner is granted operational rights for a fixed duration to recover investment and earn profit. Once cost recovery is complete, the facility is handed back to the government.
Both ROT and MOT are productivity-enhancing contractual tools, fully compatible with the needs of oil production, processing, and refining units. Despite their suitability, they have received limited attention* in Iran’s oil and gas sector and represent a significant untapped opportunity for sustainable financing and efficiency improvement.
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