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Regional Training Institute Chennai 1 Reading Material April 2017

For Departmental Circulation only

News Clippings

on

Public Private Partnership

April 2017

REGIONAL TRAINING INSTITUTE CHENNAI


Housing.com/news

Expressways across the country, are redefining

distance and connectivity and also boosting the

growth of regions along their route. The government,

on its part, wants 11,500 miles of ‘controlled-access

highways’ to be built by 2022. The country’s main

highways, which comprise 2% of India’s roads and

yet, carry 40% of the traffic, are to be widened and

improved, as well. However, ground realities often

threaten to derail the development of fast modes of

transportation.

The following facts indicate two different realities of

expressways in India: The government of India will

construct 1,000 kilometres of expressways, under its

flagship road building programme, the National

Highways Development Project, at a cost of Rs

16,680 crores. The Mumbai-Pune Expressway, has

not only provided seamless connectivity between the

two cities, but has also been a catalyst to the

economic growth of adjoining regions. Several

expressways of the National Highways Authority of

India (NHAI), are either incomplete or have failed to

take off. The $2-billion expressway from Delhi to

Agra, has failed to take off, with the developer

looking to exit this PPP project. India’s longest

Can India‘s expressways fast-track

housing growth?


expressway, an eight-lane, 1,047-kilometre road,

from Ballia to Noida, the Ganga Expressway along

the river Ganges, remains a non-starter. The Dwarka

Expressway has also run into several hurdles,

although it is home to lakhs of new residential units.

The benefits for housing and the economy, from

roadways

If expressways are deemed as crucial, why is there so

much resistance? Vineet Relia, managing director of

SARE Homes, maintains that the road sector of any

nation, is the most critical factor for economic and

social development. He points out to reports that

suggest 1% growth in infrastructure, leads to an

equivalent growth of 1% in the GDP. “To augment

roadways and ensure quicker connectivity, the

government has fast-tracked investments into the

sector and announced many new expressways.

However, the sector is still at a nascent stage and a

lot more needs to be done, in terms of improving last-

mile connectivity,” Relia explains.

Kishor Pate, CMD of Amit Enterprises Housing,

feels that India’s pace of urbanisation, cannot be

compared to most developed countries. “There are

several limitations related to technology, funding and

political will, which play a role in the deployment of

expressways in India. Nevertheless, India does have


several success stories. A prime example is the

Mumbai–Pune Expressway,” he says.

What determines the success of expressway

projects?

Experts maintain that the huge gap between the

potential of expressways and actual success, can be

attributed to planning and implementation, which

varies from one region to the other. The volume of

traffic, should be the main criterion for the selection

of expressway corridors and corridors with the

highest density, should receive focus. Then, the land

acquisition should be tackled more professionally

and the PPP model should actually be a partnership

and not merely represent a grouping of contractors

and owners.

If expressways are developed professionally, it can

definitely change the urban dynamics of the region.

For example, the stretch between Jaipur and Delhi,

has seen immense industrial activity and is a crucial

part of the golden quadrilateral. The expressway has

not only reduced the travel time, but has also opened

up opportunities for industrial and urban

development of the locations along its stretch and

also boosted tourism and other associated

commercial industries.


“Locations must not only be well-connected, but also

viable on all other fronts. If the quality of the real

estate being developed in a location is sub-standard;

if the properties are overpriced or if the projects are

chronically delayed, then, the area will not pick up,

despite excellent connectivity,” sums up Anil

Pharande, chairman of Pharande Spaces.

(The writer is CEO, Track2Realty)

Commentary - Kumar V Pratap 24 Sep, 2016

By Sanjay Singh| Express News Service

Published: 01st February 2017

NEW DELHI: Union Finance Minister Arun

Jaitley presenting the Union Budget 2017-18 on 01

Feb 2017 announced that select airports in tier-2

cities would be taken up for operations and would

be developed on Public-Private Partnership (PPP)

mode.

The PPP model for airports was started in India a

decade ago in Delhi and Mumbai. Currently,

Nagpur, Hyderabad, Bengaluru and Kochi also

have private airports.

Union Budget 2017: Airports in tier-2

cities to be developed on Public-Private

Partnership mode

http://www.epw.in/commentary

http://www.epw.in/author/kumar-v-pratap

http://www.epw.in/journal/2016/39

http://www.newindianexpress.com/author/Sanjay-Singh


Airports Authority of India is contemplating a

partial PPP model for Ahmedabad and Jaipur

airports as well. Two airports in Andhra Pradesh

are also slated to be built on the PPP model.

Public-private partnership (PPP) involves a

funding model for a public infrastructure project

which is funded and operated through a partnership

of the government and one or more private sector

companies. It involves a contract between a public

sector authority and a private party.

Last month, industry body, FICCI has stated that

there are 44 potential airports that could be

developed under the RCS policy. The government

had said that it would be evaluating it through an


independent mechanism to ensure the success of

RCS project.

The announcements on developing tier-2 airports

on PPP mode comes in the wake of government’s

ambitious plan to connect remote airports, which

include unserved and underserved airports under

the regional connectivity scheme (RCS).

India currently has 76 functional airports and the

government aims to add 50 more airports under the

RCS project, that is yet to take-off, as airlines are

not finding the project viable as they are not sure of

the demand of air travel to these remote

destinations.

The Civil Aviation Ministry has received a

substantial increase of over 22 percent in budgetary

allocation at Rs 5,167.60 crore for the next

financial year (2017-18).

Similarly, state-run airport developer, Airports

Authority of India (AAI) that has been mandated to

develop remote airports under the Regional

Connectivity Scheme (RCS) project has got a

budgetary support of Rs 2,543, which includes Rs

2,443 crore as capital infusion in the new budget

for 2017-18.

Also budgetary grants for Bureau of Civil Aviation

Security (BCAS), the regulator for aviation

security in India has been increased to Rs 214.5


crore from Rs 164.58 crore, while the regulator for

civil aviation sector, DGCA has got almost 800 per

cent increase in budgetary support of Rs 230.55

crore from Rs 28.17 crore in the last budget.

Interestingly, UN aviation watchdog, International

Civil Aviation Organisation (ICAO) is coming here

to audit India’s air safety preparedness in the

second half of this year.

http://www.huffingtonpost.in

Aman GuptaCountry Representative, Partnership to Fight Chronic Disease (PFCD)

Very often a nation's growth is measured just by its

economic performance, leading its government to

focus on and celebrate corporate successes. But this

approach leaves the more fundamental aspects of

society unaddressed, a major one being the collective

health of the people. Despite the rapid growth of the

private sector, the government has been unable to

employ its services in providing quality healthcare

across all segments of society.

Universal healthcare in India remains a distant

reality, as demand and supply in healthcare services

still show a significant gap in urban and rural areas.

Corporate Aid Can Revive India's Ailing

Public Healthcare System - PPP is the key.

http://www.huffingtonpost.in/aman-gupta


The two primary needs of healthcare in the country—

affordability and accessibility—remain unmet. For

India's economically and geographically diverse

population, universal health care is mandatory to

offer protection from healthcare catastrophes and to

improve accessibility.

Even though universal healthcare is primarily a

responsibility of the government, its exacting nature

makes it difficult for any one sector to undertake it

effectively. Therefore, it is imperative for the

government to foster an environment that enables the

growth of Public-Private Partnerships (PPP), with

the corporate sector and NGOs in order to ensure that

healthcare services reach all sections of society.

PPP works!

Public-private partnership has proven to be one of the

most feasible financial mechanisms to facilitate

growth in the Indian healthcare system. India has

tailored its fair share of successful PPPs in the

healthcare sector. There are numerous examples.

Rajiv Gandhi Super-Specialty Hospital, Karnataka,

saw the Government of Karnataka and Apollo

Hospital jointly venturing to provide super-specialty

clinical care services and management of the

hospital, along with free outpatient services for BPL

patients. Another example is of rural healthcare


delivery and management of PHCs in Arunachal

Pradesh, in which the Government of Arunachal

Pradesh contracted in Karuna Trust for management

of 11 PHCs and provision of healthcare facilities to

the local population.

Others examples of PPP include Merry Gold Health

Network (MGHN) and SAMBHAV voucher scheme

in UP, Community Health Insurance Scheme in

Karnataka, Mobile Health Service in West Bengal

and Arogya Raksha Scheme in Andhra Pradesh,

among many other.

It needs a push

Although it's been successful many times, PPP

remains widely untapped, as it still lacks immersion

in the mainstream aspects of healthcare. Encouraging

PPP for training, medical education, diagnostic

equipment and preventive care delivery requirements

will promote efficient use of corporate resources for

public health.

On the government's part, it is imperative to provide

adequate financial room to give legitimacy to the

efforts of the private sector in delivering health

services at affordable rates. Analysis of global

evidence on health spending reveals that unless a

country spends at least 5–6% of its GDP on health,


basic healthcare needs are hard to meet. Furthermore,

to deal with the challenges of budget constraints, the

government could adopt a balanced mix of PPP in

health insurance coverage.

In addition to this, strong adherence to standard

treatment guidelines needs to be ensured in both

public and private hospitals to maintain an

acceptable level of quality and accountability in

provision of care—this will help strengthen policy

and surveillance in the Indian healthcare system. PPP

can further be employed in delivering primary

healthcare across all tiers and assist in leveraging

existing infrastructure and schemes. Collaborative

public-private partnerships will bridge the gap in

healthcare demand and supply, by extending PHCs

to tier-2 and tier-3 cities. While the government can

provide the infrastructure, private players can

appoint staff, put equipment in place and maintain

them.

Building capacity by allowing collaboration of

public and private healthcare facilitates broader

access to quality healthcare.

Orchestrating practicable public-private partnerships

will not only help in enhancing delivery for better

accessibility but will also offer affordability to a

wider population by providing innovative coverage


options. The government must encourage an

environment that allows PPP to grow for the overall

development of the health sector in India. It is a win-

win situation for all, most of all for the patients.

October 27, 2016 ET Edit in ET Editorials

The Allahabad High Court has done right in directing

the Noida Toll Bridge Co (NTBCL) to stop

collecting toll, or user fee, from vehicles using the

Delhi-Noida DND expressway. What this shows is

not that public-private-partnership (PPP) projects in

India are inherently risky and to be avoided by

investors, particularly since the present ruling comes

in the wake of judicial termination of tolls on the

Delhi-Gurgaon expressway in 2014. Rather, what the

court verdict means is that one-sided contracts that

bestow undue benefits on the project developer

would be terminated or renegotiated, sooner or later.

The lesson to be learnt is that PPP projects call for

intelligent contracting, to give a fair deal to the

investor/developer, while not being onerous on the

exchequer or the consumer.

The contract with private developer NTBCL was

awarded without competition, guaranteed a 20%

DND toll verdict: Poor contracts in

PPP will not stand


return on investment for 30 years, stipulated that tolls

would go up in line with inflation and added

shortfalls in this regard to the project cost on which

returns are guaranteed. The company was to be

compensated with land for development, in lieu of

shortfalls to the guaranteed return. NTBCL’s

concession agreement executed with New Okhla

Industrial Development Authority is a poor example

of PPP in infrastructure. NTBCL has reportedly

realised the construction cost of the flyway several

times over. Rightly, the Allahabad High Court said

the levy of the toll is unjust and unfair and that the

method of calculating the total project cost of the

expressway was arbitrary and against public policy.

NTBCL has moved the Supreme Court to challenge

the court’s order, paving the way for a legal battle

that we hope will transfer the toll road to the state

soon.

India needs more roads and infrastructure to be built

and paid for through PPP. Private builders of such

projects have to make decent returns on the capital

employed. So, the need is for better contracting and

transparency in the award of the contract, and

flexibility in the time of operation, after building the

asset, before transfer to the state.


www.thehindu.com NEW DELHI, October 21, 2016

India’s infrastructure needs can be addressed by

enhancing the public-private partnership (PPP)

model, which will help attract more private sector

investment in sectors such as roads and highways,

according to a Moody's Investors Service report.

“Historical underinvestment and rapid economic

growth are straining India’s existing infrastructure,”

Abhishek Tyagi, Vice President and Senior Analyst

at Moody’s Investors Service said. “While the

country's PPP model has seen reasonable success in

some sectors over the last 20 years, PPP activity has

been low in the last four fiscal years due to

challenges with the PPP model.”

Project delays

The sharp decline in private investment in PPP

projects in recent years is due to delays in project

approvals and land purchases by the government,

complicated dispute resolution mechanisms in the

concession agreements, and lower than expected

revenues due to aggressive assumptions, the report

said.

India’s PPP model can revive private investment: Moody’s


Finance Minister Arun Jaitley in 2014 had

announced the creation of an institution called 3P

India with a corpus of Rs.500 crore to provide

support to mainstreaming public-private partnerships

(PPPs).

A panel formed for the purpose, headed by former

finance secretary Vijay Kelkar, recommended

setting up independent sector-wise regulators for

PPP projects and also called for amendments to the

Prevention of Corruption Act to differentiate cases of

graft and genuine errors in decision-making.

The panel also added that the government should

encourage the development of airports, ports and

railways through the PPP model by ensuring easier

funding for longer-term projects.

Financial viability

“Delays in project completion have resulted in cost

overruns and revenue losses to private concession

owners,” according to the report. “These factors have

impacted the financial viability of some projects and

their ability to service debt. The poor performance of

some infrastructure projects, including PPP, has been

a source of stress for both developers and the Indian

banking system.”


According to Mr Tyagi, India’s PPP framework

would be vastly improved by making a few changes

to do with risk allocation and an overhaul of the basis

on which projects are awarded.

“As such, India's PPP framework will benefit if it is

developed further to address key issues regarding

improved risk allocation, the ability to renegotiate

unpredictable factors in the bid documents, and a

move away from project awards based on one metric,

such as estimated revenues,” Mr. Tyagi said.

Looking at best practices abroad, such as in the U.K.,

Canada and Australia, the Moody’s report said that

more developed PPP markets typically feature well-

developed regulatory frameworks, largely

standardised project contracts, a large and

sophisticated investor base, and predictable project

pipelines.

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