GOVERNANCE AND DESIGN IN INFRASTRUCTURE PUBLIC PRIVATE PARTNERSHIPScistup.iisc.ac.in/presentations/Kalpana15032013.pdf · 2013-12-05 · governance and design in infrastructure public

GOVERNANCE AND DESIGN IN INFRASTRUCTURE PUBLIC PRIVATE PARTNERSHIPS

THE INDIAN EXPERIENCE WITH THE BANGALORE INTERNATIONAL AIRPORT LIMITED.

DR.KALPANA GOPALAN IAS. PH.D.(IIM-B)

PRINCIPAL SECRETARY TO THE GOVT. OF KARNATAKA

MANAGING DIRECTOR, KARNATAKA STATE HANDICRAFTS DEVELOPMENT CORPN. MANAGING DIRECTOR, KARNATAKA PUBLIC LANDS CORPN.

VISITING PROFESSOR (P), INSTITUTE OF SOCIAL & ECONOMIC CHANGE.

4/22/2013 2KALPANA GOPALAN

IAS 1987

?????

IIMB

2007

AGENDA

RESEARCH OBJECTIVE

MOTIVATION

OVERVIEW OF LITERATURE, CRITIQUE AND NEED FOR RESEARCH.

BRIDGING THE GAP: QUESTIONS; FRAMEWORK; PROPOSITIONS;METHODS

THE CASE: THE DECISION STORIES

OBSERVATIONS AND LESSONS4/22/2013 3KALPANA GOPALAN

BANGALORE INTERNATIONAL AIRPORTKEMPEGOWDA INTERNATIONAL AIRPORT


BENGALURU INTERNATIONAL AIRPORT

RESEARCH OBJECTIVE


4/22/2013 KALPANA GOPALAN 6

RESEARCH OBJECTIVE

To address a critical research gap: Inadequacy ofscholarship on the detailed process of decisionmaking in a real life scenario using the single casestudy of the Bangalore International Airport

MOTIVATION


IMPORTANCE OF INFRASTRUCTURE & ROLE OF PPPS


PPPs attempted by national and sub-national govts in India: airports, power, roads

Poor investment climate, lack of an enabling institutional framework, high risks, insufficient capacity in bureaucracy & polity, erosion of public confidence

Essential to draw lessons from PPP experience to enhance preparedness and streamline processes to manage risks and create an enabling policy climate

Significance of research for policy practice

OVERVIEW OF THE LITERATURE


CONCEPTUAL JOURNALISM

LOCATING OUR RESEARCH

PUBLIC POLICY

POLICY

POLICY DESIGN

EMPIRICAL

DEVELOPINGCOUNTRY

OURRESEARCH


PPP LITERATURE

ORG.THEORY FINANCE/LAWECONOMICSCASE STUDIES

RESEARCH QUESTIONS



WHAT SHOULD PUBLIC POLICYMAKERS LEARN TO EXPECTWHEN THEY UNDERTAKE PPPS IN THE INDIAN CONTEXT?

HOW DO WE ENHANCE OUR PREPAREDNESS TOIMPLEMENT FUTURE PPPS AND TO EXECUTE EFFECTIVEPPPS IN INDIA?

WHAT GOVERNANCE AND ORGANIZATION DESIGNELEMENTS CAN WE USE TO ACHIEVE PUBLIC INTERESTAND PRIVATE EFFICIENCY IN A PPP IN THE INDIANCONTEXT?

THE FRAMEWORK


AN INTEGRATIVE MULTI-DISCIPLINARY THEMATICFRAMEWORK


Boyer , Methdological Precedet: (Abdel-Aziz & Russel 2001; Parker & Hartley 2001)

Process

GovernancePartnership

What Actually Happens?Decisionmaking in Practice

Micro Managerial Challenges


PROPOSITION 1

The Implementation of Public Private Partnerships Requires a Shift of Focus : from Project to Process.


PROPOSITION 2

Public Private Partnerships require a second Shift of Focus-from the Firm (SPV) to the Partnership, that is,

the partnership becomes the institution


PROPOSITION 3

Public Private Partnerships require a Broadening of Our Notion of Governance-from the Dyadic Engagement between the Public and Private Partners and Intra-

organizational Governance Mechanisms to Domain-based Governance, Engagement with Society and Citizenry and Inter-organizational Mechanisms

RESEARCH METHOD & DESIGN


CHOICE OF BIALSnowball/chain selection (Miles & Huberman 1994)

Critical case: Among the earliest PPPs in india; first PPP in Karnataka, first PPP in Civil Aviation sector;first Greenfield project; model/ forerunner for future PPPs (Miles & Huberman 1994; Yin 2003)

Typical case: displays distinctive characteristics of an infrastructure PPP; elements common to transnational PPPs; issues find reflections in literature (Miles & Huberman 1994;Yin 2003)

Politically significant case: the politics of infrastructure (Menon 2005a,2005b; Miles & Huberman 1994;Yin 2003)

Socially significant case: Bangalore as contested terrain (Pani 1998; Heitzman1999;Benjamin 2000; Nair 2000; Kamath 2006)

4/22/201319G.KALPANA FPM(CPP)

MULTILAYERED ANALYSIS

INDIA

BIAL

KARNATAKABANGALORE

Methodological precedent: Allison 1971Method: Embedded agency: (Yin 2003; Greenwood & Suddaby 2006)


1989-2009

THE BIAL DRAMA


SELECTION OF AIRPORT SITE


THE PPP DECISION

IDEAS OF

‘APPROPRIATENESS’RISK TRANSFERCOSTS

Where pressures to outsource or in source conflict (Parker & Hartley2003)

Where pre-sentiation is difficult owing to a complex &uncertain environment ( Crocker & Masten 1996)

Where quality of the service can be well-specified but quality of theconstruction cannot be (Hart 2003)

In situations of ex-ante competition, scarce skills, innovativethinking, economies of scale, measurability of quality (de Bettignies &Ross 2004)

Projects with long term planning horizons, requiremanagement of construction & delivery risks, & capital intensive(UK Treasury 1993)

Sectors such as roads & bridges (IPPR 2001)

If costs of risk transfer are lower than potential benefits (OECD 2008)

Where financial cost is lower than the public sector comparator(UK Treasury 2005)

Where the infrastructure/service is not a core activity (Grimsey &Lewis 2004)


THE CASE: A CONSTELLATION OF INFLUENCES

SMK

ECONOMICREFORM

REGIONALPOLITICS

WB STRATEGY

GROWTH OFIT

BRAND

BANGALORE

DEMANDS OFURBAN

MIDDLECLASS

ICONIZATIONOF CHIEF

MINISTERS

COMPETITIONFOR

INVESTMENTS

LONG-PENDING

DEMAND FORAIRPORT


(Rajan & Marwah 1998;Heitzman 1999;Nair 2000;Benjamin 2000;Saxenian2002;Menon 2005;Rudolph & Rudolph 2006;Mukherji 2007;Kamath 2006; Ahluwalia 2007; Kirk 2007;Bhagwati 2007;Chen & Warren 2008)

THE BEGINNINGS

1960s: Civil enclave in HAL

Congestion ; disturbance to test flight activity; public safety; opening the skies

1989:New airport mooted by Valluri report: 4 options

HAL’s strong objection , lack of space & state government offer of land clinched the decision

Political/Industry/Media support

THE PROCESSSite Selection Committee: 3/1991 to 6/1992; 6 meetings + Special Core Group Meeting on IASM; Technical , Government & Industry representatives

Process: Site Selection Norms, NAA Proforma, Site Identification by State Government, Spot Inspection, Aerial survey by Air force Captain,

Documents & Reports: NAA Comparative Analysis Report, Perspective Plan of Indian Airlines, Cargo at Bangalore Air Cargo Complex, Special Core Group IASM Report

Choices: North of Malur, Kengeri-I, Kengeri-II, Vijayapura, Yelahanka, South of Devanahalli, Mysore Road near Bidadi

Criteria: Physical, Operational , Safety & Land Availability

Vijayapura (55 km) vs. Devanahalli (30 km). Distance Determined the Decision

THE HAL CONTROVERSY


THE FALLOUT

Save HAL Campaign

Was the Choice Casual?

Why did the Controversy Break Out ?

Why did the Campaign Fail?

Contractual vs. Political Governance

FINDINGS

SSC: Processually Correct: Validity of Proposition 1

Processual Factors Overtaken by Domain Factors: Proposition 3

Appreciation of Operational & Administrative Constraints

Technical over People Issues; Separation of Site Selection & Implementation Stages

Constancy of Change: HAL Campaign & GOI

Limitations of Ad Hoc Mechanisms

LEARNINGSParticipation: attention to stakeholder needs; creating public awareness; need for ongoing advocacy to keep pace with shifts in public sentiment; media management

Planning: far reaching impact of public decisions; anticipation in long gestation projects; adapting executive action to changing socio -economic needs

Partnering: attention to neglected aspects; intra agency relations with employees; continuous engagement between union and state govts to avoid blame boomerangs; beyond proposition 2

Shift in Governance: mandate of contractual over popular governance

FINDING A PARTNER


THE PROCESS


• GOI Approval• KSIIDC nodal

agency• 15.04.1999 mtg

MOU

• Appt of IL&FS

Steerig Ctte

• 2 stage process• Open competion• 17 EOIs

EOI

• 7 bidders• Several dropouts

RFP

• 2 bidders• External Expertise

PP

• GMP/State Support • 4 levels of scrutiny

EC

• Siemens selected

• Cabinet approval

NT

• Post-contract deviations

SHA

Steering Committee assisted by EC & NT: 15 meetings; 33 months; 03.05.1999 - 23.01.2002

Lengthy process with policy, organizational, capacity, political, time constraints

Lack of a road map & planning

Bidderdriven changes:state support, intra-consortia awards; indicted by JHC

Iterative loopy process waiting on critical decisions

BID VS. PROJECT : COSTS, OVERRUNS, DEVIATIONS


Bid=1128 crores

GMP=1075-1150 crores

Financial Close=1411.79 crores

After Redesign=1930.29crores

After IPE=2470.29

FINDINGS


Financial consequences of decisionmaking

Spotlight on constraints

Poor planning: delay & vendor driven

Substantial search & transaction costs for expertise

Disconnect between bidding & implementation

Technical/Financial vs. People focus

Selective inclusion, opaqueness & complexity

Multilithic state: Intra agency partnering relations

LEARNINGS


Criticality of Planning

Enabling policy framework instead of adhoc iterative approach

Citizen centric Participation

Customer focus

Accountability mechanisms and transparency

Capacity building

Proactive role of state in a vital step in PPP formation

LAND ASSEMBLY & ACQUISITION


4276 acres (4009) , 12 villages,1544 land losers; Govt (400), Pvt (2593), Forest (1394) Gramthana (30)

KIADB: 1994-2002 & Cabinet approval

Acquisition award : 6 las per acre

Relief & Rehabilitation well managed

PROFILE & PROCESS


2500 acres:SSC report: 1992

3500 acres: Karnataka Cabinet Decision: 1996

4009 acres:Karnataka Cabinet Decision:2004


Land Grabbing in guise of airport

No rationale for increase

Heathrow: 6 times capacity , 35% less area

State contribution: 30 crores >> 175 crore

150 cr HUDCO loan repayable by GOK

Present value 10000 crore (JHC, 2009)

FINDINGS


Consequences of poor planning

Lack of a rudimentary road map: delay and piecemeal process

Equity implications: Disconnect between higher and field level agencies

Financial consequences: slow somersaults in major decisions

Socio-economic consequences: development and its downside

LEARNINGS


Focus on ethics

No alternative to public participation

Equity in policy design: revenue stream for landlosers

Need for long range and imaginative planning

OBSERVATIONS & LESSONS


1 2


Thank you

4/22/2013 KALPANA GOPALAN

Snowball Interviews to Select Case

Jan 09 #10; 55 pgs

Preliminary/ Opportunistic /Systematic Data CollectionApr - May 09 ; Jan-Apr 10 ; Apr ‘10 onwards2000;45000

Timeline of Events

Jun - Jul 09 444 pgs

Aug 09; 15 pgs

The BIAL Story

Design and Method

Sept - Oct 09

Nov- Dec 09

Literature Review

......and miles to go

44

Research Proposal

Jan 2010



drifting purposivelyIIMB INTL PUBLIC POLICY CONF: AUG 2010IIMB RISK MGMT PROGRAM: SEPT 2010(PRACTITIONERS)IISC INTL INFRASTRUCTURE CONF: OCT 2010 (2).CENTRE FOR ETHICAL GOVERNANCE : NOV 2010 (IAS OFFICERS)WARWICK UNIV CRITICAL GOVERNANCE : DEC 2010.UNIV. OF SALERNO , ITALY, MAR 2011UNITED NATIONS, GLOBAL ETHICS FORUM , GENEVA, JUN 2011GLOBAL BUSINESS CONF, SINGAPORE MGMT UNIV, JUL 2011 IFS OFFICERS PROGRAM , IIMB, SEPT 2008 & 2009PGP PROGRAM, IIMB: NOV 2009BHAVAN’S JOURNAL OF INTL BUSINESSIIMB ALUMNUS MAGAZINE.GLOBAL ETHICS FORUM DIGITAL LIBRARY.‘GLOBUS’CHAMBER OF COMMERCE MAGAZINE, ITALY.