“A CRITICAL STUDY OF PUBLIC PRIVATE PARTNERSHIP FOR INFRASTRUCTURE DEVELOPMENT IN INDIA-.doc

8/9/2019 A CRITICAL STUDY OF PUBLIC PRIVATE PARTNERSHIP FOR INFRASTRUCTURE DEVELOPMENT IN INDIA-.doc

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SYNOPSIS

ON

A CRITICAL STUDY OF PUBLIC PRIVATE

PARTNERSHIP FOR INFRASTRUCTURE

DEVELOPMENT IN INDIA:-

WITH SPECIAL REFERENCE TO

MAHARASHTRA STATE

(1997-2007

Submitted to

Rastrasant Tukadoji Maharaj Nagpur University, Nagpur

for Registration for the Degree of Doctor of Phiosophyin the !acuty of "ommerce

R!"!#$%&!$RA'ESH I CHOU)SEY

BE* MBA

S+,!$."/$

D$ MU)UL A BURHATE

BE* MBA* SET* P&D


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DR PAN'ABRAO DESHMU)H INSTITUTE OF

MANAEMENT TECHNOLOY AND REASEARCH*DNC*CONRESS NAAR * NAPUR-12

(200

CONTENTS

Chapter TITLE PAGE NO

1 Introduction 1-18

2 Objectives o the stud! 1"

# P$an o %or& 2'-21

( )esearch *ethodo$o+! 22-2,

Chapter .che/es 20-28

ib$io+raph! 2"-#1

1 INTRODUCTION

)3 PAN4A)AO E.5*675 IN.TIT6TE O *ANAGE*ENT TEC5NOLOG9 AN )EA.EA)C5: NAGP6)-123


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Govern/ent o India ;GOI< has decided to active$! pursue the Pub$ic Private

Partnership ;PPP< /ode$ to /eet the +aps in provision o basic inrastructure

services3 *inistr! o inance has underta&en a pro+ra//e o capacit! bui$din+ or

PPPs in the .tate Govern/ents and Centra$ *inistries3

As $on+-ter/ econo/ic +ro=th re>uires invest/ents in inrastructure:

+overn/ent ace a +ro=in+ need to ind a$ternative =a!s to inance inrastructure3

To /eet this need in the ace o scarce inancia$ resources: +overn/ents /a! ind it

opti/a$ to ocus on or/u$atin+ pub$ic po$icies rather than bui$din+ the needed

inrastructure3 Indeed: the evidence c$ear$! sho=s that +overn/ents have been

$ar+e$! unsuccessu$ in providin+ independent$! the /uch-needed inrastructure and

pub$ic +oods to support econo/ic +ro=th3 At the sa/e ti/e: private ir/s cannot be

re$ied upon to bui$d and de$iver these pub$ic inrastructures independent$!3 or these

reasons: /utua$$! beneicia$ partnerships bet=een pub$ic and private sectors can be

i/portant31

Attractin+ private capita$ in this critica$ sector is reco+ni?ed as a &e! strate+!

to /eet the resource deicit3 Conse>uent$!: Pub$ic Private Partnership ;PPPs< are

bein+ encoura+ed as the preerred /ode or e@ecution and operation o

inrastructure projects3 PPPs oer a nu/ber o advanta+es in ter/s o enhancin+ the

abi$it! to ta&e a $ar+er she$ o inrastructure invest/ents: introducin+ specia$i?ed

e@pertise and cost reducin+ techno$o+! as =e$$ as brin+ in eiciencies in operation

and /aintenance32

Pub$ic Private Partnership ;PPP< Project /eans a project based on a contract

or concession a+ree/ent: bet=een a Govern/ent or statutor! entit! on the one side

and a private sector co/pan! on the other side: or de$iverin+ an inrastructure

service on pa!/ent o user char+es3 Private .ector Co/pan! /eans a co/pan! in

=hich 1 or /ore o the subscribed and paid up e>uit! is o=ned and contro$$ed b!

a private entit!3

PPPs are broad$! reer to $on+-ter/: contractua$ partnerships bet=een the

pub$ic and private sector a+encies: speciica$$! tar+eted to=ards inancin+:

desi+nin+: i/p$e/entin+: and operatin+ inrastructure aci$ities and services that

=ere traditiona$$! provided b! the pub$ic sector3 These co$$aborative ventures are

bui$t around the e@pertise and capacit! o the project partners and are based on a

contractua$ a+ree/ent: =hich ensures appropriate and /utua$$! a+reed a$$ocation o



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resources: ris&s: and returns3 This approach o deve$opin+ and operatin+ pub$ic

uti$ities and inrastructure b! the private sector under ter/s and conditions a+reeab$e

to both the +overn/ent and the private sector is ca$$ed PPP or P# or Private .ector

participation ;P.Pua$it!: price certaint!: and cost-eectiveness ;va$ue or /one!< o the

partnership3 Govern/ent re/ains active$! invo$ved throu+hout the projectBs $ie

c!c$e3 6nder the PPP or/at: the +overn/ent ro$e +ets redeined as one o aci$itator

and enab$er: =hi$e the private partner p$a!s the ro$e o inancier: bui$der: andoperator o the service or aci$it!3 PPPs ai/ to co/bine the s&i$$s: e@pertise: and

e@perience o both the pub$ic and private sectors to de$iver hi+her standard o

services to custo/ers or citi?ens3 The pub$ic sector contributes assurance in ter/s o

stab$e +overnance: citi?ensB support: inancin+: and a$so assu/es socia$:

environ/enta$: and po$itica$ ris&s3 The private sector brin+s a$on+ operationa$

eiciencies: innovative techno$o+ies: and /ana+eria$ eectiveness: access to

additiona$ inances: and construction and co//ercia$ ris& sharin+3

12 THE SALIENT FEATURES OF A PPP

Not a$$ projects =ith private sector participation are PPP projects3

Essentia$$!: PPPs are those ventures in =hich the resources re>uired b! the project in

tota$it!: a$on+ =ith the acco/pan!in+ ris&s and re=ardsreturns: are shared on the

basis o a predeter/ined: a+reed or/u$a: =hich is or/a$i?ed throu+h a contract3

PPPs are dierent ro/ privati?ation3 %hi$e PPPs invo$ve private /ana+e/ent o

pub$ic service throu+h a $on+-ter/ contract bet=een an operator and a pub$ic

authorit!: privati?ation invo$ves outri+ht sa$e o a pub$ic service or aci$it! to the

private sector3 A t!pica$ PPP e@a/p$e =ou$d be a to$$ e@press=a! project inanced

and constructed b! a private deve$oper3

A PPP project is essentia$$! based on a si+niicant opportunit! or the private

sector to innovate in desi+n: construction: service de$iver!: or use o an asset3 To be

viab$e: PPPs need to have c$ear$! deined outputs: avenues or +eneratin+

unda/enta$ >ua$ities o a PPP project

HIH PRIORITY TO OVERNMENT-PLANNED PRO'ECT: -

The project /ust have e/er+ed ro/ a +overn/ent-$ed p$annin+ and



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prioriti?ation process3 The project /ust be such that: re+ard$ess o the

source o pub$ic or private capita$: the +overn/ent =ou$d sti$$ =ant the

project to be i/p$e/ented >uic&$!3

ENUINE RIS) ALLOCATION: - .hared ris& a$$ocation is a

principa$ eature o a PPP project3 The private sector /ust +enuine$!

assu/e so/e ris&3

MUTUALLY VALUABLE: -Da$ue shou$d be or both sides: =hich

/eans +overn/ent shou$d a$so +enuine$! accept so/e ris&s and not

transer the entire ris& to the private sector: and vice versa3 Diabi$it! Gap

undin+ .che/e non+overn/enta$ revenue and suicient capacit! in the

private sector to successu$$! de$iver project objectives3

The various PPP or/s and or/ats In a PPP: the FprivateB partner cou$d be a

private co/pan!: a consortiu/: or a non+overn/enta$ or+ani?ation ;NGO


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in$uenced b! the provisions o the e@istin+ $e+a$ and re+u$ator! ra/e=or&: the

structurin+ o the project to attract private resources: and the potentia$ to +enerate

uture cash $o=s3

1 THE )EY CONSIDERATIONS IN PPPS

PPPs oten invo$ve co/p$e@ p$annin+ and sustained aci$itation3

Inrastructure projects such as roads and brid+es: =ater supp$!: se=era+e and

draina+e invo$ve $ar+e invest/ent: $on+ +estation period: poor cost recover!: and

construction: socia$: and environ/enta$ ris&s3 %hen inrastructure is

deve$oped as PPPs the process is oten characteri?ed b! detai$ed ris& and cost

appraisa$: co/p$e@ and $on+ biddin+ procedures: diicu$t sta&eho$der

/ana+e/ent: and $on+-dra=n ne+otiations to inancia$ c$osure3 This /eans

that PPPs are critica$$! dependent on sustained and e@p$icit support o the

sponsorin+ +overn/ent3 To dea$ =ith these procedura$ co/p$e@ities and

potentia$ pita$$s o PPPs: +overn/ents need to be c$ear: co//itted: and

technica$$! capab$e to hand$e the $e+a$: re+u$ator!: po$ic!: and +overnance

issues33

13 BENEFITS AND STRENTHS:

The e/er+ence o PPPs is seen as a sustainab$e inancin+ and institutiona$

/echanis/ =ith the potentia$ o brid+in+ the inrastructure +ap3 PPPs pri/ari$!

represent va$ue or /one! in pub$ic procure/ent and eicient operation3 Apart ro/

enab$in+ private invest/ent $o=s: PPPs a$so de$iver eicienc! +ains and enhanced

i/pact o the invest/ents3 The eicient use o resources: avai$abi$it! o /odern

techno$o+!: better project desi+n and i/p$e/entation: and i/proved operations

co/bine to de$iver eicienc! and eectiveness +ains =hich are not readi$! produced

in a pub$ic sector project3 PPP projects a$so $ead to aster i/p$e/entation: reduced

$iec!c$e costs: and opti/a$ ris& a$$ocation3 Private /ana+e/ent a$so increases

accountabi$it! and incentivi?es peror/ance and /aintenance o re>uired

service standards3 ina$$!: PPPs resu$t in i/proved de$iver! o pub$ic services and

a$so pro/ote pub$ic sector reor/s3

14 ACCESS TO PRO'ECT FINANCE

The ore/ost beneit o adoptin+ the PPP route is the abi$it! to access capita$

undin+ ro/ the private sector: considerin+ that undin+ is +ettin+ increasin+$!

$i/ited ro/ pub$ic sector bud+ets3 Thus: PPPs a$$o= +overn/ents to overco/e their



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bud+etar! and borro=in+ constraints and raise inance or hi+h-priorit! pub$ic

inrastructure projects3 Essentia$$!: +overn/ents are ab$e to use private inance

throu+h PPPs to bui$d inrastructure projects that =ou$d previous$! have been bui$t

b! the pub$ic sector usin+ pub$ic sector inance3 PPP projects a$so $evera+e avai$ab$e

pub$ic capita$ b! convertin+ capita$ e@penditure into $o=-o-service pa!/ents3

The hi+h de+ree o econo/ic e@terna$it! o pub$ic inrastructure: and the

co//ercia$ and socioecono/ic ris&s invo$ved in deve$opin+ and operatin+ the/:

has /ade it diicu$t to appropriate returns ro/ inrastructure invest/ents3 The $on+

+estation period o inrastructure projects a$so re>uires sustainab$e inancia$ and

operationa$ capacit!3 Thereore: there is increasin+ re$uctance in both the pub$ic and

private sectors to absorb a$$ the costs and assu/e a$$ the ris&s o bui$din+ and

operatin+ these assets a$one3 .ince the private sector assu/es the ris& o

nonperor/ance o assets and rea$i?es its returns i the assets peror/: the PPPProcess invo$ves a u$$-sca$e ris& appraisa$3 This resu$ts in better cost esti/ation and

better invest/ent decisions34

15 )EY CONSTRAINTS TO PRIVATE FINANCIN OF

INFRASTRUCTURE:

inancia$ sector constraints to private inancin+ o inrastructure projects are

co/p$e@: capita$ intensive: $on+ +estation projects that invo$ve /u$tip$e and oten

uni>ue ris&s to project inanciers3 Inrastructure projects are characteri?ed b! non-recourse or $i/ited recourse inancin+: i3e3: $enders can on$! be repaid ro/ the

revenues +enerated b! the project3 This $i/ited recourse characteristic: and the sca$e

and co/p$e@it! o an inrastructure project /a&es inancin+ a tou+h cha$$en+e:

=hich is urther co/pounded b! t=o actors3 irst: a co/bination o hi+h capita$

costs and $o= operatin+ costs i/p$ies that initia$ inancin+ costs are a ver! $ar+e

proportion o the tota$ costs3 .econd: inrastructure project inancin+ ca$$s or a

co/p$e@ and varied /i@ o inancia$ and contractua$ arran+e/ents a/on+st /u$tip$eparties inc$udin+ the project sponsors: co//ercia$ ban&s: do/estic and internationa$

inancia$ institutions ;Isuate e>uit! inance tends to be the /ost cha$$en+in+ aspect o

inrastructure project inancin+: as e>uit! t!pica$$! shou$ders the +reatest

$eve$ o operationa$: inancia$ and /ar&et ris&3 5o=ever: at present: $i/ited

e@it options or investors $i/its e>uit! inancin+3

Other constraints inc$ude a sha$$o= capita$ /ar&et ;a$beit continuous$!

i/provin+


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*e??anine inancin+: =hich is critica$ in undin+ inrastructure projects in

deve$oped countries: is a$so $i/ited in India3 The reasons or this are /an!:

notab$!

;i< The $ac& o a suicient$! $ar+e and varied poo$ o

inrastructure projects: =hich $eads to a preerence a/on+

undin+ institutions to opt or /ore strai+htor=ard $oans

;rather than h!bridsuit!

instru/ents ;$i&e /e??anine inancin+< co//ensurate$! =ith

the ris&s associated =ith the/3

Interest rate caps pose a constraint to attractin+ e@terna$ co//ercia$

borro=in+: but an even +reater constraint in uti$i?in+ orei+n currenc! $oans

is the $ac& o a suicient$! deep or=ards /ar&et in orei+n e@chan+e3

Inrastructure projects re>uire $on+ tenor $oans: and i inanced throu+h

orei+n currenc! borro=in+s these need to be ade>uate$! hed+ed a+ainst

currenc! ris&s since e= inrastructure projects have ore@ earnin+s to serve

as a natura$ hed+e3 Inabi$it! to hed+e $on+ ter/ currenc! ris& in a /ar&et

=hich is $i/ited to one !earBs or=ard cover poses a bi+ cha$$en+e to the use

o orei+n currenc! $oans in these projects3

6nderdeve$oped debt /ar&ets are !et another &e! constraint to inrastructure

inancin+: +iven that /ost inrastructure projects be+in to +enerate proits in

1'-1 !ears and re>uire $on+er ter/ debt3 The $ac& o si?e and depth in

IndiaBs corporate bond /ar&et is associated part$! =ith the $ac& o depth in

the +overn/ent bond /ar&et and the absence o a !ie$d curve or

+overn/ent bonds =hich cou$d serve as a bench/ar& or corporate bond3

e!ond that: corporate debt /ar&ets are constrained b! cu/berso/e pri/ar!

issuance +uide$ines inade>uate credit inor/ation ineicient c$earin+ and

sett$e/ent /echanis/s poor and $en+th! enorce/ent $a=s re$atin+ to

deau$t proceedin+s ineiciencies arisin+ ro/ =ea&nesses in re+u$ation:

inc$udin+ poor coordination a/on+ the various a+encies invo$ved in

corporate debt /ar&et re+u$ation and the absence o $on+ ter/ investors3



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A host o re+u$ator! and institutiona$ prob$e/s acin+ inancia$ institutions

;Is< constrain their participation in inrastructure projects3 A unda/enta$

actor $i/itin+ the participation o a$$ t!pes o Is in inrastructure inancin+

re$ates to re+u$ator! uncertaint!: =hich raises the ris&-proi$e o

Inrastructure sectors: and /a&es Is re$uctant to inance inrastructure:

particu$ar$! in the ear$! sta+es: =here project ris&s are concentrated3

)estrictive +overn/ent po$icies and re+u$ator! +uide$ines have urther

constrained the participation o insurance co/panies and pension unds in

inrastructure3 or e@a/p$e: Insurance )e+u$ator! and eve$op/ent

Authorit! ;I)A< re>uires insurance co/panies to invest in debt paper =ith

a /ini/u/ credit ratin+ o FAAB: =hich auto/atica$$! e@c$udes invest/ent

b! insurance co/panies in debt paper o /ost private inrastructure

sponsors3 Insuicient &no=$ed+e and appraisa$ s&i$$s re$ated to inrastructureprojects a$so pose a constraint3

isca$ barriers

An enab$in+ isca$ environ/ent is a prere>uisite or attractin+ private sector

p$a!ers to inherent$! hi+h ris& ventures3 There are so/e isca$ issuesH

particu$ar$! in re$ation to .ections 1';2#G< and .ection 8'IA o the Inco/e

Ta@ ActHthat need to be ironed out in order to +ive urther i$$ip toinrastructure sectors3 A$so: the act that near$! a$$ states suer ro/ serious

isca$ i/ba$ances and are ridden =ith hu+e debt ob$i+ations does not /a&e

the/ the /ost ban&ab$e business partners or the private sector3,

17 RELEVANCE OF PPPS FOR INDIA

171 MASSIVE DEFICIT IN INFRASTRUCTURE SERVICES:espite

beco/in+ the second astest +ro=in+ and the ourth $ar+est econo/! o the

=or$d: India continues to ace $ar+e +aps in the de/and and supp$! o

essentia$ socia$ and econo/ic inrastructure and services3 )apid$! +ro=in+

econo/!: increased industria$ activit!: bur+eonin+ popu$ation pressure: and

a$$-round econo/ic and socia$ deve$op/ent have $ed to +reater de/and or

better >ua$it! and covera+e o =ater and sanitation services: se=era+e and

draina+e s!ste/s: so$id-=aste /ana+e/ent: roads and seaports: and po=er

supp$!3 Increased de/and has put the e@istin+ inrastructure under

tre/endous pressure and ar outstripped its supp$!3



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172 DEFICIENT INFRASTRUCTURE IS A 6BINDIN

CONSTRAINT The inrastructure shorta+es are provin+ to be the $eadin+

bindin+ constraint in sustainin+: deepenin+: and e@pandin+ IndiaBs econo/ic

+ro=th and co/petitiveness30 This has a$so been e/phasi?ed in the /id-ter/

appraisa$ o the Tenth ive 9ear P$an3 It is =ide$! be$ieved that $ac& o +ood

>ua$it! inrastructure is costin+ India 12 +ro=th in +ross do/estic product

;GP< ever! !ear3 Good >ua$it! inrastructure has been the /ain enab$er o

hi+her $eve$ o econo/ic +ro=th in deve$oped as =e$$ as deve$opin+

countries $i&e 6.A: )ussia: *a$a!sia: and China

17 POVERTY REDUCTION:Lac& o inrastructure is preventin+ the

sectora$: re+iona$: and socioecono/ic broadenin+ o the econo/! and its

beneits: and is aectin+ inc$usive +ro=th in India3 The beneits oacce$erated +ro=th o the $ast decade have not been shared b! $ar+e sections

o the popu$ation =hich are $abor dependent: $o= s&i$$ed: rura$ based: and

=or&in+ in a+ricu$ture and /anuacturin+ sectors3 Inrastructure shorta+es

have s$o=ed the +ro=th o /anuacturin+ industries and a+ricu$ture: =hich

are the $abor-absorbin+ /ar&ets or the $o= s&i$$ed3 Povert! $eve$s re/ain

si+niicant: =ith about one-ourth o the popu$ation $ivin+ in povert!3

1 STATUS OF PPPS AND )EY OVERNMENT INITIATIVES

India had a e= notab$e PPPs as ear$! as the 1"th centur!3 The Great Indian

Peninsu$ar )ai$=a! Co/pan! operatin+ bet=een o/ba! ;no= *u/bai< and Thana

;no= Thane< ;18#


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are rea$i?ed3 The Co//ittee on Inrastructure is supported b! the E/po=ered

.ubco//ittee: =hich or/u$ates: revie=s: and approves po$ic! papers and

proposa$s or sub/ission to Co//ittee on Inrastructure: and /onitors and o$$o=s

up on i/p$e/entation o the decisions o Co//ittee on Inrastructure3 The

Co//ittee on Inrastructure has a$so or/ed a Co//ittee o .ecretaries to prepare

and i/p$e/ent an Action P$an or providin+ ade>uate road and rai$ connectivit! or

IndiaBs /ajor ports3 Guide$ines: sche/es: and action p$ans3 The +overn/ent has

pub$ished severa$ &e! docu/ents on )ai$ )oad Connectivit! o *ajor Ports

Guide$ines or inancia$ .upport to Pub$ic Private Partnerships in Inrastructure

Guide$ines on or/u$ation: Appraisa$ and Approva$ o Pub$ic Private Partnership

Projects .che/e or inancin+ Inrastructure Projects throu+h the India

Inrastructure inance Co/pan! inancin+ o the Nationa$ 5i+h=a! eve$op/ent

Pro+ra//e ;N5Puic& processin+ o cases3 In-princip$e approva$ has

been +ranted or ive projects3 E$i+ib$e sectors3 .ectors e$i+ib$e or Diabi$it! Gap

undin+ .che/e are Transportation ;roads: rai$=a!s: seaport: airport


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.che/e3 These inc$ude )oads and rid+es: Airports and .eaports: Co//uter )ai$:

6rban Transit and Par&in+ %ater .upp$! and %aste=ater .!ste/ E$ectricit! and

Gas istribution *unicipa$ .o$id %asteio/edica$ %aste Co$$ection and isposa$

Convention Center and %aterront )edeve$op/ent3

111 ELIIBILITY CRITERIA

To avoid shortco/in+s in project proposa$ and thereb! avoid de$a!s in the

approva$ process: the Diabi$it! Gap undin+ .che/e has the o$$o=in+ criteria

;i< Govern/ent or a statutor! entit! shou$d /a&e the proposa$ and not

the private part!3 The &e! to /a&in+ PPPs acceptab$e is to create an

environ/ent =here PPPs are seen to be a =a! o attractin+ private

/one! into pub$ic projects: not puttin+ pub$ic resources into private

projects3 ;Approach Paper to the E$eventh P$anuic& processin+ o cases3

The approva$ /echanis/ bein+ o$$o=ed is

;i< Diabi$it! Gap undin+ .che/e undin+ up to )s 1'' crore or each

project =i$$ be sanctioned b! the E/po=ered Institution: =hich is

chaired b! the Additiona$ .ecretar!: Econo/ic Aairs

;ii< Proposa$s up to )s 2'' crore =i$$ be sanctioned b! the E/po=ered

Co//ittee: =hich is chaired b! .ecretar!: Econo/ic Aairs and

;iii< A/ounts e@ceedin+ )s 2'' crore =i$$ be sanctioned b! the

E/po=ered Co//ittee =ith the approva$ o the inance *inister3

The centra$ +overn/ent is a$so =or&in+ on a nu/ber o initiatives to assist

and encoura+e capacit! bui$din+ at the state and centra$ $eve$3 An Inter-*inisteria$

Group ;I*Gua$iication o bidders under PPP to avoid $!-b!-ni+ht operators3 A PPP Ce$$has been estab$ished in the epart/ent o Econo/ic Aairs to ad/inister various

PPP proposa$s and coordinate various activities to pro/ote PPPs3 The Govern/ent

o India is a$so =or&in+ to strea/$ine the approva$ process or PPPs in the centra$

sector3 7no=$ed+e /ana+e/ent and disse/ination3 A co//ittee under 4oint

.ecretar! ;Inrastructureua$iication criteria or dierent sectors: standard ter/s and conditions: and

project preparation /anua$3 These +uidin+ docu/ents and /anua$s are ai/ed at the

use o standardi?ed procure/ent and appraisa$ procedures: resu$tin+ in increased

transparenc! and stab$e po$ic! environ/ent or the private sector3 The Govern/ent

o India is a$so bui$din+ a centra$i?ed database and a =ebsite on PPP projects in

India to address the $ac& o authentic and credib$e inor/ation re$atin+ to PPPs3 It

=i$$ be a d!na/ic database: =ith /onitorin+ o on+oin+ projects3 The pub$ic sector

PPP a+encies =i$$ be re>uired to provide data inputs to &eep the database updated3

The or/at is bein+ ina$i?ed and the project is bein+ outsourced to a database

/ana+e/ent a+enc!3 The database and the =ebsite =i$$ to+ether act as an

inor/ation c$earin+ house e@chan+e or a$$ pub$ic and private sector sta&eho$ders

to access inor/ation re$ated to Govern/ent o India po$icies and initiatives:

standard docu/entation: best practices: database o PPPs: /onitorin+ inor/ation:

business opportunities: +$oba$ vendors: project deve$op/ent aci$ities: consu$tin+

ir/s: PPP $endersinancia$ institutions: and other investors38

11 CAPACITY BUILDIN AT STATE LEVELS



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A &e! reason or the s$o= pace o +eneration and sub/ission o PPP project

proposa$s ro/ the states has been $ac& o e@pertise in the project sponsorin+ a+enc!

to structure and eva$uate PPP proposa$s3 The +overn/ent has a$so reco+ni?ed that

there is a dearth o projects3 To overco/e this constraint: the Govern/ent o India

has been tar+etin+ states or capacit! bui$din+ eorts and has stepped up these

eorts3 It is providin+ assistance or the creation o PPP ce$$s in various state

+overn/ents as a noda$ a+enc!3 The PPP too$&it: inor/ation database: and trainin+

=or&shops are directed at rapid$! bui$din+ up statesB capacit! to /obi$i?e PPP

projects3 The Govern/ent o India: throu+h the re+iona$ =or&shops and other

interactions: is a$so identi!in+ the capacit! bui$din+ needs o state +overn/ents and

is +eared to supportin+ an! state initiatives on bui$din+ their capacit! on PPP3 An

Inter-*inisteria$ Group ;I*G


15/29

.ectors e$i+ib$e or India Inrastructure inance Co/pan! Li/ited undin+

are )oads and brid+es: rai$=a!s: seaports: airports: in$and =ater=a!s: and other

transportation projects Po=er 6rban transport: =ater supp$!: se=era+e: so$id-=aste

/ana+e/ent: and other ph!sica$ inrastructure in urban areas Gas pipe$ine

inrastructure projects in .EJs and internationa$ convention centers and other

touris/ inrastructure projects3 An! project a=arded to a private sector co/pan! or

deve$op/ent: inancin+: and construction throu+h PPP =i$$ have overridin+ priorit!

under the sche/e3 India Inrastructure inance Co/pan! Li/ited =i$$ not ordinari$!

underta&e an! appraisa$: =hich =ou$d be done b! the $ead ban&3 Loan assistance

ro/ Fspecia$ purpose vehic$eB =i$$ not e@ceed 2' o the project cost3 A$$

disburse/ents and recoveries =ou$d be underta&en throu+h the $ead ban&3 The

$endin+ nor/s o India Inrastructure inance Co/pan! Li/ited are

The co/pan! /a! render inancia$ assistance throu+h direct $endin+ to

e$i+ib$e projects or reinance to ban&s and inancia$ institutions or $oans =ith a

tenure o ten !ears or /ore3 Ten proposa$s have been received but no undin+ has

ta&en p$ace %a! or=ard3 .trea/$ine approva$ process or PPPs on the $ines o

Govern/ent o India notiication FInrastructureB and FPPPB be entered as subjects

in the )u$es o usiness Transaction and assi+ned to one epart/ent or ocus PPP

Ce$$s be created one .ecretar!-$eve$ oicer be dec$ared the FNoda$ OicerB or

dea$in+ =ith the subject and coordination =ith Govern/ent o India Le+a$ and

institutiona$ ra/e=or& to=ards an Inrastructure Act Inrastructure depart/ents to

set o=n inancia$ .tatus o PPPs and 7e! Govern/ent Initiatives # tar+ets o

attractin+ private invest/ent throu+h PPP these be /onitored and revie=ed as FP$an

outside o P$anBHas part o the E$eventh P$an ina$it! in +overn/ent decision-

/a&in+ ;)evisitin+ decision re+ardin+ PPP erodes credibi$it!


16/29

113 PRIVATE SECTOR PERSPECTIVE

The private sector perspective =as presented b! representatives ro/ the

Inrastructure Leasin+ and inancia$ .ervices Li/ited ;IL.


17/29

process3 *e/ories o ho= the Enron issue =as hand$ed have a$so &ept investors

a=a!3

orei+n investors $oo& or the unda/enta$s o an invest/ent opportunit!3

This covers the ris&-return ba$ance: /ar&et potentia$: and other co/petin+

Opportunities3 or project-speciic considerationsHthe sa/e as the do/estic

investors concernsHthe! $oo& out or un/et de/and: revenue potentia$:

de/onstrated project viabi$it!: and po$itica$ co//it/ent to the project3 ut: /ost

i/portant$!: the! $oo& or opportunities that ba$ance ris&s and re=ards bet=een

pub$ic and private partners3 5o=ever: the situation is e@pected to chan+e: and the

+overn/ent needs to ta&e co+ni?ance o the &ind o PPPs that cou$d be attractive to

orei+n investors3

115 BUILD ENUINE AND MUTUALLY REWARDIN PARTNERSHIPSPPPs represent partnerships in action =ith hu+e sta&es or both the pub$ic

sector and private sector a+encies to succeed co$$ective$!3 It is i/portant that the

pub$ic and private sectors =or& to+ether: &eepin+ the project and outco/es in ocus

and not see&in+ pri/ari$! to /a@i/i?e se$-interest: co$$aboratin+ or /utua$$!

endurin+ va$ue3 It is i/portant that the $e+ac! o /istrust and patrona+e +ives =a! to

+enuine partnerships =ith the rea$i?ation that PPPs represent a ne= =a! o doin+

business: and are not about co//and and contro$3 6$ti/ate$!: the project partners

need to re/e/ber that PPPs are not /ere$! about inance: the! are a$so about

i/provin+ the >ua$it! and eicienc! o pub$ic services3

117 OPPORTUNITIES IN INDIAN INFRASTRUCTURE SECTOR:

The o$$o=in+ tab$e sho=s the opportunities e@ist in the &e! inrastructure area inIndia

OPPO)T6NITIE. ININ)A.T)6CT6)E

O6TLOO7

PO%E)10

Over "':''' *% o ne= +eneration capacit! is

re>uired b! 2'123 A correspondin+ invest/ent is re>uired intrans/ission and distribution net=or&s3 Po=er costs need to be reduced ro/ thecurrent hi+h o 8-1' cents unit b! a co/binationo $o=er AT M C $osses: increased +enerationeiciencies and added $o= cost +eneratin+capacit!3

TELECO**6NICATION.11

India e@pected to be a/on+ the astest +ro=in+te$eco/ /ar&ets in the =or$d3 Projected +ro=th o #'-(' p3a3 to reach 2'/i$$ion subscribers b! 2''"-2'1'3 Over # /i$$ion ne= users are added ever!/onth /ost$! in =ire$ess3



18/29


OPPO)T6NITIE. ININ)A.T)6CT6)E

O6TLOO7

)OA.12

Annua$ +ro=th projected at 12-1 or passen+er

traic: and 1-18 or car+o traic3 Over ',' bi$$ion invest/ent is re>uired overthe ne@t !ears to i/prove road inrastructure3

PO)T.1

Car+o hand$in+ at a$$ the ports is projected to+ro= at 030 p3a3 ti$$ 2'1#-1( =ith *inor ports+ro=in+ at a aster rate o 83 co/pared to 03(or the *ajor ports 3 Traic esti/ated to reach ",' /i$$ion tonnes b!2'1#-1( Containeri?ed car+o is e@pected to +ro= at 103#

over the ne@t " !ears3 The Ne= orei+n Trade Po$ic! envisa+esdoub$in+ o IndiaBs share in +$oba$ e@ports in ne@tive !ears to 1' bi$$ion3 A $ar+e portion o the orei+n trade to be throu+hthe /ariti/e route " b! vo$u/e and 0' b!va$ue3

CIDIL ADIATION MAI)PO)T.13

Passen+er traic is projected to +ro= at a CAG)o over 1 in the ne@t !ears3 To cross 1'' /i$$ion passen+ers p3a3 b! 2'1'3

Car+o traic to +ro= at over 2' p3a3 over thene@t ive !ears 3 To cross #3# /i$$ion tonnes b! 2'1'3 *ajor invest/ents p$anned in ne= airports and up+radation o e@istin+ airports33

PET)OLE6* MNAT6)AL GA.14

5i+h GP +ro=th rate: rapid$! +ro=in+ vehic$epopu$ation and better road inrastructure =i$$ driveconsu/ption o petro$eu/ products3 Industr! is e@pected to +ro= at a CAG) o about8 to 1' 3 Over 1"' **T o reinin+ capacit! re>uired b!2'1'3 Over 12'**.C* o additiona$ de/and or

Natura$ Gas in the ne@t ive !ears3 )ecent +as inds and increased use o +as or

po=er +eneration: petroche/ica$s: erti$i?ers andcit! +as distribution3


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2 OB'ECTIVES OF THE STUDY

The /ain objective o the stud! is to investi+ate PPP in se$ected

Inrastructure eve$op/ent 6nderta&en b! Govern/ent o India in

*aharashtra .tate3 *ore speciica$$! the stud! ai/s to e@a/ine the o$$o=in+

aspects o the se$ected underta&in+3

13 To eva$uate ro$e o Pub$ic Private Partnership in India or

inrastructure deve$op/ents3

23 To stud! the ris& invo$ved in Pub$ic Private Partnership3

#3 To stud! the $e+a$ perspective inPub$ic Private Partnership3

(3 To stud! the status o the Pub$ic Private Partnership in the

*aharashtra re+ion =ith specia$ e/phasis on .pecia$

Econo/ic Jone o *u$ti *oda$ Internationa$ 5ub Airport at

Na+pur3

3 To predict the uture deve$op/ents =ith reerence to Pub$ic

Private Partnership in the ie$d o Inrastructure in Na+pur

re+ion o *aharashtra state3



20/29

PLAN OF THE WOR)

L.8!$#8+$! R!.!:A $iterature revie= surve!s scho$ar$! artic$es: boo&s and

other sources ;e3+3 dissertations: conerence proceedin+s< re$evant to the issue:

area o research: providin+ a description: su//ar!: and critica$ eva$uation o

each =or&3 The purpose is to oer an overvie= o si+niicant $iterature

pub$ished on the topic3

F#%8 F.;.uired inor/ation: and its purpose is to desi+n a stud! that

=i$$ test the h!potheses o Interest: deter/ine possib$e ans=ers to the research

>uestions: and provide the inor/ation needed or decision /a&in+3

F.!>; W/$?:ie$d =or& or ata co$$ection invo$ves proper techni>ues to

co$$ect the ra= data ro/ the various sources =ith pri/e objectives to

/ini/i?e the data-co$$ection errors3

D#8# P$!,#$#8./ @ A#>"." It invo$ves the editin+: codin+: transcription

and veriication o data3

R!,/$8 P$!,#$#8./ @ P$!"!8#8./:The indin+ shou$d be presented in a

co/prehensib$e or/at3

3

RESEARCH METHODOLOY


.r3 No3 P$an o %or& uration

13 Literature )evie= # *onths

23 act indin+ , *onths

#3 )esearch esi+n or/u$ation # *onths

(3 ie$d %or& # *onths

3 ata Preparation M Ana$!sis # *onths

,3 )eport Preparation M Presentation , *onths

Tota$ 2( *onths


21/29

I=,/$8#%! #; N!!; / 8&! S8+;:

$/.< ,/,+>#$.8:-.ince the 1""'s: there has been a rapid rise

o PPPs across the =or$d3 Govern/ents in deve$opin+ as =e$$ as

deve$oped countries are usin+ PPP arran+e/ents or i/proved

de$iver! o inrastructure services3 Govern/ents are bui$din+

transport ;roads: rai$=a!s: to$$ brid+es


22/29

=aste: and risin+ constraints on bud+ets and borro=in+: do not

a$$o= +overn/ents to /a&e the re>uired invest/ents in

up+radin+ or rehabi$itatin+ the e@istin+ inrastructure or creatin+

ne= inrastructure3

N!!; /$ ! .#%.< #; ."8.8+8./#> =!%."=":- The

po$itica$ econo/! o inrastructure shorta+es: constrained pub$ic

resources: and risin+ pressure ro/ citi?ens and civi$ societ!

have co/bined to push +overn/ents and po$ic!/a&ers to

e@p$ore ne= =a!s o inancin+ and /ana+in+ these services3

Govern/ents have been pushed to e@p$orin+ ne= and

innovative inancin+ /ethods in =hich private sectorinvest/ent can be attracted throu+h a /utua$$! beneicia$

arran+e/ent3 .ince neither the pub$ic sector nor the private

sector can /eet the inancia$ re>uire/ents or inrastructure in

iso$ation: the PPP /ode$ has co/e to represent a $o+ica$: viab$e:

and necessar! option or the/ to =or& to+ether3

H,/8&!".":

5I Pub$ic Private Partnership is vita$ in the overa$$ inrastructure

deve$op/ent o Na+pur re+ion in *aharashtra .tate3

5II Pub$ic Private Partnership is successu$ in brin+in+ econo/ic

deve$op/ent in Na+pur re+ion o *aharashtra state3

5III Pub$ic Private Partnership reduces responsibi$it! and accountabi$it!

o the Govern/ent3

U.!$"! / 8&! S8+;:

The stud! is $i/ited to Inrastructure sector o Na+pur re+ion in

*aharashtra state3

S#=,>.< T!%&.+!":



23/29

It is proposed to use rando/ sa/p$in+ /ethods3 Pre-deter/ined

>uestionnaires sha$$ be circu$ated to obtain the responses3 The surve!

techni>ue sha$$ be supp$e/ented in intervie=s =ith the Govern/ent oicia$s3

It =ou$d be ensured that the sa/p$e =ou$d represent the universe3

S#=,>! ".!:

The sa/p$e pertains to the stud! Pub$ic Private Partnership in

inrastructure sector o Na+pur re+ion in *aharashtra state3 This re+ion

contains upco/in+ project o *u$ti *oda$ Internationa$ 5ub Airport at

Na+pur3 This stud! covers a period o 1' !ears co//encin+ ro/ 1""03 A

sa/p$e o 2' oicia$s ro/ Pub$ic and Private Or+ani?ations sha$$ be se$ected

rando/$! ro/ each Inrastructure sector =hich co/prise o )oads: )ai$:Po=er: Te$eco//unication: civi$ Aviation M Airports3

D#8# %/>>!%8./ T//>":

The data sha$$ be co$$ected throu+h intervie= and >uestionnaire3 A set

o open ended and c$ose ended >uestion =i$$ prepared to co$$ect the data3

S/+$%!" / D#8#:

P$.=#$ D#8#:

The pri/ar! data /a! be co$$ected ro/ pub$ic representatives and

Govern/ent oicia$s throu+h schedu$es intervie= and >uestionnaires3

S!%/;#$ D#8#:

The secondar! data can be traced ro/ oice records: journa$s: annua$

reports and other docu/ents o the corporation3

P$!"!8#8./ / D#8#:

or Presentation o data: si/p$e >uantitative techni>ues =i$$ be used3

or better understandin+ dia+ra/s: +raphs: pie dia+ra/s: etc3: =i$$ be used at

re$evant p$aces3

L.=.8#8./" / 8&! "8+;:



24/29

The present investi+ation: thou+h carried out on scientiic $ines: suers

ro/ the o$$o=in+ $i/itations3 A$$ o the/ born out o nature and /a+nitude

o the stud!3

13 The pri/ar! data =i$$ be co$$ected throu+h >uestionnaire ro/ pub$ic

representatives and Govern/ent oicia$s3 The e$icited inor/ation =i$$

be co/p$ete$! based on their persona$ e@perience3

23 The inor/ation that =i$$ be e@pressed b! the pub$ic representatives

and Govern/ent oicia$s =i$$ a$so be restricted to e@periences =ith

respective inrastructure sector3

#3 .ince the data =i$$ be co$$ected ro/ /ore than one source: there /a!

be s$i+ht discrepancies bet=een one source and the other3

(3 %hi$e co/putin+ the percenta+es and avera+es the i+ures =i$$ be

appro@i/ated3 .o/eti/es the tota$s /a! not e@act$! ta$$!3

3 There /a! be discrepancies in the secondar! data on account o their

incorrect reportin+3



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4 CHAPTER SCHEMES

Chapter 13 INT)O6CTION

This chapter =i$$ provides overvie= o the Pub$ic Private

Partnership in inrastructure o India3 It =i$$ hi+h$i+ht the concept and

histor! o Pub$ic Private Partnership3 It =i$$ cover issues in

deve$op/ent o inrastructure throu+h Pub$ic Private Partnership =ith

the ocus on ph!sica$ inrastructure sectors $i&e e$ectricit!: roads:

ports: urban inrastructure: and =ater3 This chapter =i$$ cover $e+a$

ra/e=or& under$!in+ Pub$ic Private Partnership and appropriate

ra/e=or&s to understand and structure partnerships inc$udin+

private inance initiatives3 It =i$$ a$so hi+h$i+ht the nature o ris&s in

varieties o Pub$ic Private Partnership3

Chapter 23 )E.EA)C5 *ET5OOLOG9

This chapter =i$$ provide the /ethodo$o+! desi+ned or this

research =or&3 It =i$$ provide in depth inor/ation about the

i/portance o the stud! and objectives o the stud!3 It =i$$ a$so ocus

on the sa/p$in+ techni>ues: too$s and sa/p$e si?e =hich =i$$ be used

or research3 It is necessar! to desi+n a suitab$e /ethodo$o+! or

underta&in+ s!ste/atic M scientiic stud!3

Chapter #3 ATA COLLECTION

The data =i$$ be co$$ected ro/ various sources =hich can be

c$assiied as pri/ar! source and secondar! source3 It invo$ves proper

techni>ues to co$$ect the ra= data ro/ the various sources =ith

pri/e objectives to /ini/i?e the data-co$$ection errors3 The data

co$$ected sha$$ be processed s!ste/atica$$! M presented in tabu$ar

or/ accordin+ to the stated objectives o the stud!3



26/29

Chapter (3 .TATI.TICAL EDAL6ATION O T5E ATA

.tatistica$ data ana$!sis provides hands on e@perience to

pro/ote the use o statistica$ thin&in+ and techni>ues to app$! in

order to /a&e decisions in the research prob$e/3 6nder this chapter

ana$!sis o the data =i$$ be done on the basis o various statistica$

techni>ues3 The interpretation =i$$ be based on the ana$!sis3 Tab$es:

+raphs: i+ures and other statistica$ data =i$$ be inc$uded at the ti/e

o presentation

Chapter 3 I.C6..ION: INING. AN CONCL6.ION.

Ater statistica$$! eva$uatin+ the co$$ected data: it =i$$

interpreted a+ainst the stated objectives o the research in this

chapter3 The inor/ation +athered and interpreted =i$$ be su//ari?ed

and conc$uded3

Chapter ,3 )ECO**ENATION. AN .6GGE.TION.

ased on the +athered inor/ation and indin+s usin+ statistica$

techni>ues: detai$ reco//endations and su++estions =i$$ be +iven in

this chapter b! considerin+ the researcherBs o=n opinion dra=n on

the ana$!sis3

ILIOG)AP59

This section =i$$ provide reerences ta&en ro/ the boo&s:

journa$ and =eb sites =hi$e doin+ the research3



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BIBLIORAPHY

BOO)S

#i-Net=or&: India Inrastructure )eport 2''8:Business Models of the FutureOO)universit! press: II* Ahe/dabad: Edition *a! 2''8

.har/a 9: Pub$ic Private partnership in Inrastructure: Ditasta Pub$ishin+ Pvt3 Ltd3:Ne= e$hi: Edition 2''0

P3 4e+adish Gandhi and *343 4oseph: Pub$ic-Private Partnership in Nation ui$din+:eep and eep pub$ications: Ne= e$hi: 2''

A&into$a A&into!e: *atthias ec& and C$i 5ardcast$e: Pub$ic Private partnership inInrastructure- *ana+in+ )is&s and Opportunities: $ac&=e$$ Pub$ishin+: 6.A:ebruar! 2''#

WEB SITE

R!!$!%!"1 *ona 5a//a/i: 4ean-rancois )uhash!an&i&o: and Etienne 3 9ehoue : I*=or&in+ paper eter/inants o Pub$ic-Private-Partnerships in InrastructureQ Apri$2'', p3 ,


URL DATE TIME

5TTP%%%3PPPININIA3CO* 0th 4une: 2''8 0#' P*

http%%%3IN)A.T)6CT6)E3GOD3IN 0th 4une: 2''8 0( P*

http%%%3INDE.T*ENTCO**I..ION

3IN

8th 4une: 2''8 12#' P*

5TTPPO%E)*IN3NIC3IN 1(th4une: 2''8 #' P*

5TTP%%%3OTINIA3CO* 22th 4une: 2''8 113'' A*

5TTP%%%3T)AI3GOD3IN 22th 4une: 2''8 1131 A*

5TTP*O)T53NIC3IN 22th 4une: 2''8 113#' A*

5TTP%%%3N5AI3O)G 22th 4une: 2''8 113( A*

5TTP.5IPPING3NIC3IN 22th 4une: 2''8 113 A*

5TTPCIDILADIATION3NIC3IN 22th 4une: 2''8 1231 A*

http===3airportsindia3or+3inaai/ain3ht/ 22th 4une: 2''8 123#' A*

5TTPPET)OLE6*3NIC3IN 22th 4une: 2''8 13'' P*
http://www.oup.co.in/search_detail.php?id=144621#authordetailshttp://www.oup.co.in/search_detail.php?id=144621#authordetailshttp://www.oup.co.in/search_detail.php?id=144621#authordetailshttp://www.oup.co.in/search_detail.php?id=144621#authordetailshttp://www.oup.co.in/search_detail.php?id=144621#authordetailshttp://www.oup.co.in/search_detail.php?id=144621#authordetailshttp://www.pppinindia.com/http://www.infrastructure.gov.in/http://www.investmentcommission.in/http://www.investmentcommission.in/http://powermin.nic.in/http://www.dotindia.com/http://www.trai.gov.in/http://morth.nic.in/http://www.nhai.org/http://shipping.nic.in/http://civilaviation.nic.in/http://petroleum.nic.in/http://www.oup.co.in/search_detail.php?id=144621#authordetailshttp://www.oup.co.in/search_detail.php?id=144621#authordetailshttp://www.pppinindia.com/http://www.infrastructure.gov.in/http://www.investmentcommission.in/http://www.investmentcommission.in/http://powermin.nic.in/http://www.dotindia.com/http://www.trai.gov.in/http://morth.nic.in/http://www.nhai.org/http://shipping.nic.in/http://civilaviation.nic.in/http://petroleum.nic.in/


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2 rochure o Govern/ent o India: *inistr! o inance: epart/ent o Econo/icAairs: Creatin+ and enab$in+ environ/ent or state projectsQ *arch 2''0: p 13

# epart/ent o Econo/ic Aairs ;EA


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