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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
Regional Training Institute Chennai 3 Reading Material April 2017
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?
Regional Training Institute Chennai 4 Reading Material April 2017
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
Regional Training Institute Chennai 5 Reading Material April 2017
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.
Regional Training Institute Chennai 6 Reading Material April 2017
“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
Regional Training Institute Chennai 7 Reading Material April 2017
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
Regional Training Institute Chennai 8 Reading Material April 2017
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
Regional Training Institute Chennai 9 Reading Material April 2017
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.
Regional Training Institute Chennai 10 Reading Material April 2017
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
Regional Training Institute Chennai 11 Reading Material April 2017
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,
Regional Training Institute Chennai 12 Reading Material April 2017
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
Regional Training Institute Chennai 13 Reading Material April 2017
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
Regional Training Institute Chennai 14 Reading Material April 2017
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.
Regional Training Institute Chennai 15 Reading Material April 2017
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
Regional Training Institute Chennai 16 Reading Material April 2017
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.”
Regional Training Institute Chennai 17 Reading Material April 2017
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.
*****