Public-Private
Partnership Model to Boost Infrastructure Development
Public
Private Partnerships (PPPs) is an effective tool for bringing private sector
efficiencies in creation of economic and social infrastructure assets and for
delivery of quality public services. The extent of private sector participation
in creation of infrastructure, especially through PPP, has shown a promising
increase in the recent years. As on January 2012, there were 881 PPP projects
with Total Project Cost of Rs. 543,045 crore as compared to over 700 projects
with TPC of Rs.371,239 crore by March 2011. These projects are at different
stages of implementation i.e. under bidding, construction and operational
stages. The broad sectors encouraged under the PPP framework are Highways,
Railways, Ports, Airports, Power and Urban Infrastructure etc.
PPP
Projects Approved by the PPPAC
The
appraisal mechanism for the PPP projects has been streamlined to ensure speedy
appraisal of projects, eliminate delays, adopt international best practices and
have uniformity in appraisal mechanism and guidelines. The appraisal mechanism
notified includes setting up of the Public
Private Partnership Appraisal Committee (PPPAC) responsible for the appraisal of
PPP projects in the Central Sector. Since its constitution in January 2006,
PPPAC has granted approval to 223 projects, with a total project cost of Rs.
212,819.50 crore.
Standardized
bidding and contractual documents have been notified. These include model Request
for Qualification (RFQ); Request for Proposal (RFP) and RFP for technical
consultants; Model Concession Agreements (MCAs) for different sectors including
Highways (both National and State Highways), Ports, Urban Transport (Metro),
Power sectors and Manuals of Standards & Specifications have been developed
and standardized. Further, Project Sponsors are encouraged toward projects
through a transparent open competitive bidding process, which leads to greater
transparency and consistency to the bid process and terms of contract.
Sectoral
Distribution of PPP Projects
The maximum numbers of PPP projects
have been undertaken
in the Road sector with 447 projects, constituting 51.6% of the total
projects. This was followed
by Urban Development sector with 177 projects (22.4%), Energy sector with 77
projects (8.9%), Ports with
62 projects (7.2%) and the Tourism sector with 55 projects (6.4%). 225 projects have been completed
whereas 410 are under various stages of construction and 184 under bidding
stage and the remaining in other various stages. State-wise, Karnataka had the
maximum of 105 projects with total cost of Rs. 44,459.85 crore under PPP
followed by Andhra Pradesh 98 projects with project cost of Rs. 67,696.31
crore, Madhya Pradesh 86 projects (Rs.
14,928.7 crore), Maharashtra 76 projects (Rs. 45,916.34 crore), Gujarat 72
projects (Rs. 45,315.02 crore), Rajasthan 65 projects (Rs. 16,479.5 crores),
Tamil Nadu 50 projects (Rs. 21,491.04 crores), Haryana 35 projects (Rs.
67,840.57 crore), West Bengal 34 projects (Rs. 6,849.8 crore) and Orissa (Rs.
22,652.88 crore), Kerala (Rs. 22,281.54 crores) and Punjab (Rs. 4,653.7 crores)
with 32 projects each.
Viability Gap Funding
Scheme
A unique characteristic of infrastructure
projects is that the positive externalities caused by projects cannot be
captured by project revenues alone. Hence, a project may be economically
essential but commercially unviable. Such projects, which are marginally viable
or unviable, can be made financially attractive through a grant. Viability Gap
Funding (VGF) Scheme was devised for Financial Support to PPPs in
Infrastructure. It provides VGF support to PPP projects up to 20 per cent of
the Total Project Cost (TPC). So far, 131 projects have been granted approval with
TPC of Rs. 67,237.47 crore and VGF support of Rs. 13,077.28 crore. An amount of
Rs. 617.00 crore has been disbursed as Viability Gap Funding (VGF) under the
Scheme for Financial Support to PPPs in Infrastructure.
The following sub-sectors have been included
in the list of sectors eligible for VGF support under the Scheme for Financial
Support to Public Private Partnerships (PPPs) in Infrastructure i.e. Viability
Gap Funding Scheme.
“Capital investment in the creation of
modern storage capacity including cold chains and post-harvest storage” vide
Department of Economic Affairs (DEA) Notification dated March 17, 2011.
“Education, health and skill development,
without annuity provision” vide DEA Notification dated May 4, 2011.
“Infrastructure projects in Special
Economic Zones and internal infrastructure in National Invest and Manufacturing
Zones” vide Notification dated February 2, 2012.
“Oil/Gas/Liquefied Natural Gas (LNG)
storage facility (includes city gas distribution network); Oil and Gas pipelines
(includes city gas distribution network); Irrigation (dams, channels,
embankments etc.); Telecommunications (fixed Network) (includes optic
fibre/wire/cable networks which provide broadband/internet); Telecommunication
towers; Terminal markets; Common infrastructure in agriculture markets; and
Soil testing laborites” vide Notification dated May 24, 2012.
Scope of Viability Gap Funding (VGF)
scheme to support PPP projects in infrastructure has also been extended to
attract private investment. The Delhi Mumbai Industrial Corridor (DMIC) is
being developed on either side along the alignment of the Western Dedicated
Rail Freight Corridor with Central assistance of Rs. 18,500 crore spread over a
period of 5 years.
Projects Approved under India
The IIPDF assists projects
that closely support the best practices in PPP project identification and
preparation. The IIPDF supports up to 75% of the project development expenses.
So far, 51 projects have been approved with an IIPDF assistance of Rs. 64.51
crore.
To
intensify and deepen the capacity building of public functionaries at the State
and municipal level and to integrate the capacity building programme on PPPs in
the ongoing programmes at the State level, a comprehensive National PPP
Capacity Building Programme has been developed by Department of Economic Affairs (DEA), which has been rolled out at the State level in
collaboration with KfW German Development Bank. Under it, eight different
programmes have been conducted and 155 Trainers of Trainers (ToTs) have been
covered. 15 States and two Central Training Institutes viz. Indian Maritime
University
National
PPP Policy and Rules
Pursuant
to the announcement by the Finance Minister in the Budget Speech for the year
2011-12 to come up with a “Comprehensive Policy on PPPs, DEAhas
prepared the draft ‘National Public Private Partnership Policy’ which is under
finalization. Further, pursuant to the recommendations of the Committee on
Public Procurement, and to ensure that the PPP projects are procured and
implemented by following laid down process and observing principles of
transparency, competitive bid process, affordability and value for money, the
draft ‘PPP Rules’ have been prepared. These are
undergoing extensive consultation process at the Central and State Governments
level before their finalization.
Online
Database
An online
database on PPP projects www.pppindiadatabase.com and the website www.pppinindia.com in the country have been developed.
The purpose of the website is to provide comprehensive and current information
on the status and extent of PPP initiatives in India
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