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Public Private Partnership

A SELF- STUDY PAPER


SUBMITTED TO
DEPARTMENT OF MANAGEMENT

Under the Supervision Submitted By

Ms. Mohit Rewari Usha


Assistant Professor M.B.A.4th Semester
Department of Management Roll No. 16000102013
Ch. BansiLal University, Bhiwani

Countersigned by

Self Study Paper In-Charge

DEPARTMENT OF MANAGEMENT
CH. BANSI LAL UNIVERSITY, BHIWANI

April, 2018
CERTIFICATE-1

This is to certify that the material embodied in the Self-Study Paper entitled
“Public Private Partnership” based on my original work. My indebtedness to
other work has been duly acknowledged at the relevant places.

Usha

MBA 4th Sem

16000102013

CERTIFICATE-2

This is to certify that the Self-Study Paper entitled, “Public Private


Partnership” submitted by Usha, Roll No. 16000102013 has been supervised
and checked by me and I find it fit for submission.

(Supervisor)

Ms. Mohit Rewari

Assistant Professor of

Department of Management

Ch. Bansi Lal University, Bhiwani


ABSTRACT
The public private partnership have emerged as a very feasible, viable and growing
mode of creating mode of creating infrastructure for our country. Though public sectors will
continue to play a dominant role in building of infrastrure ,the ppps have enable us to
channelize private sectors investment in infrastructure. keeping in mind that our country is
still starved of adequate infrastructure required for high level development ,the opportunities
for the growth of joint venture between both the sector are huge and desirable. The
anticipated percentage percentage participation of the private sectors in the twelfth plan is
much higher than the eleventh plan. The Indian ppp scenario as it stands today presents an
optimistic picture. However several bottleneck and challenges have been encountered in ppp
model development.

Some of the major challenges also related to Regulation and availability of finance for the
private sector. The government of India on its part has been fully aware of the benefits that
such partnership can offer to our country and has been taking steps to remove some of these
problems.

Keywords : public sector, private sector , infrastructure, economic growth .

Introduction :Public private partnership means an arrangement between the


government/statutory entity on the side and a privet sectors entity on the other, for the
provision of public assets and or public services ,through investments beings made and /or
public service through investment being made and /or management being undertaken by the
private sectors entity for a specified period of time , where there is well define allocation of
risk between the private sector and the public entity and the private entity receive
performance linked payments that conform to specified and pre-determined performance
stand’s, measurable by public entity or its representative.

The above definition broadly indicates that it is a limited period arrangement where a private
sector entity provides a public asset or a public service which is traditionally provide by the
government in return of some performance base payment . the focus is on a strong elements
of service delivered accept and compliance to pre-detrmined and measurable standards to be
specified by the sponsoring authority.

Objective of the study :


1. To learn in detail about public private partnership.
2. To understand problems, challenges and risk.
3. To know its features.
Basis of public private partnership

Some of the essential conditions to mark a public private arrangement are envisaged .in the
definition by the national police on the ppps. Though each ppp contract is a unique one
depending on the circumstances of the case , still each one of them is based on some inherent
characteristics common to search contract . how ever a few other confiscation which are also
desirable in a good and fair ppp are related to specifications about risks assumption mode of
payment, whether the payment would be through case follows from the public sector based
on performance or whether it would be charged from the consumers using the service
,incentive and penalty statures in the arraignments so as to the ensure that the private sector is
benchmarked against service delivery, identification of minimum technical specification
without effecting the possibility of innovation and specified time period either transfer of the
projects or its implementation by the private sector entity.

Types of public private partnership :

1) Design- build :-
 Designs and builds the infrastrure
 To meet the public sectors partners specification
 For fixed price
 All risk is to private sector

2) Design build finance operate


 Source financing
 Carries out all designs
 Builds the infrastructure

3) Build- own –operate-transfer

 Source financing
 Carries out all designs
 Builds the infrastructure
 Operates the facility

Example of public private partnership :-


Education ,leveraging private real estate for public schools.
A collection of interesting p3 examples exist around repurposing existing
private real estate for use as classrooms for public schools or building new mixed-use
construction that houses both private businesses as well as public school classrooms. A few
example around the nation can be found on the heritage foundation’s report “ new tax law
boosts school construction with public-private partnership “ including:

1. 700 students in mesa,Az report to class each morning in a former smith’s grocery
store.
2. 1200 students in Raleigh,Nc are repurposing a manufacturing facility as classroom
space.
3. Two schools in phoenix,Az share a 300000sq ft. Venue that once served as the
marvel mall.
Beyond repurposing existing real estate, construction.com detail a new York city
project where the city leased 1.5 acress of city owned property to a private firm in
exchange for the developer adding space for two public schools in a story building
that also houses a whole foods store. The projects marks the 17th p3 deal that new
York’s department of education has signed to build new public schools by
leveraging mixed-use development with private companies.

Characteristics of Public private partnership -


Ppps do not mean reduced responsibility and accountability of the government.

i. The remains accountable for services quality, price certainty and cost-effectiveness of
the partnership.

Governments roll is one of facilitators and enabler by assuming social , environmental


and political risk ; private partners roll is one of financial , builder and operator of the
service or facility and it typically assumed construction and commercial risk.
ii. Resources required by the projects in totality along with accompanying risks and
reword /return are shared on the basis of a pre-determined agreed formula ,which is
formalized through a contract .
iii. Ppps deliver efficiency gains and enhance impact of the investment .ppp projects also
leads to faster implementation, reduce life cycle costs and optimal risk allocation.
iv. Ppp does not involves outright sale of public service or facility to the private sector.
v. Private sector company in a ppp means a company in which 51% or more of the
subscribed and paid up equity is owned and control by a private entity .

Problems , challenges and risk in ppps


The ppp sector in India is still new and recent. To gauge the effect and impact of
any economic phenomenon, a passage of a minimum time period is imperative. Only than
and than can meaningful conclusion be drawn .as said earlier the public private partnership
are only 12 to 15 years old and a major part of activity on those grounds has actually taken
place during the last 7 to 10 years. apparently the report and reviews have come out about the
ppp sector in India point towards the positive stance taken by the economy towards such
partnership. The enabling environment created by the central and the state government to
harness the private sectors investment in such projects has generated a very conducive
environmental for such partnership. yet there are some instance and cases where the ppps
have not been an outright success. The literature and cases where the ppps have not been an
out right success. Yet the literature and the particular case study on the subjects reflect the
most of the problems that have been encountered and experienced in theses have emerged
along the way and the fact remains that these problems.

The ppp experience so far:


In India most ppps have been restricted to the roads sectors. The us $ 100 million Delhi-
Noida bridge projects , implemented on a boot framework on the basis of a 30 year
concession ,is india first major ppp initiative. The jaipur-kishangrgh highway is build operate
transfer success story and it has been decided that the four leaning o f tan thousand kilometres
, under nhdp will be done entirely own boot bases. Then there are successful ppps in water
supply .the tirupur project in tamilnaidu is a shining example . it is a boot project and an spv
was set up for the purpose . the project how ever took more than 10 yr from concept to
financial closer. Many other ppps in water supply have been finance through municipal bonds
in cities such as ahmhedabad , Ludhiana ad Nagpur the housing projects up on the out skirts
of Kolkata city are a good example of what a ppp modal can deliver in terms of quality
housing and living conditions to middle and lower middle class.

Outcomes : the technical assistance aims to :


 Help the participating state to implement ppp schemes effectively and efficiently.
 Enhance capacity of ppp sells in participant entities to prepare ,evaluate and a
price ppps in infrastrure
 Significantly improve monitoring of over all progress in ppps infrastrure at both
central and state level through well-knit data bases.
 Increase awareness among potential private sector partners about the projects
cycle of ppp projects in infrastrure and the expectation of government with respect
to value for money.
 Over the long term, an increase in private sectors participation in inflatrures
devlpoment and management through out the country.

Online ppp toolkit :


A ppp toolkit is being developed which will enable investors’ ppp and ppp stake holders to
understand the ppp process butter. He toolkit will be provide on www.pppinindia.com. It is
envisaged to provide the technical the content and methodology for all government
practitioners involved in different faces of the life cycle of ppps . thrust will be given for
understanding the entire ppp life cycle, including inception , feasibilities procurement,
approving ,monitoring, regulation and accounting treatment.

The toolkit manual will cover;

 What are ppps and why use them rather than public procurement
 The ppp project cycle
 Ppp inception
 Understanding government commitments and exposure to ppps
 Ppp feasibility study
 Ppp procurement
 Accessing the vgf
 Auditing ppps and evaluating their success.

Conclusion :
The rapid strides taken by India toward achieving economic growth have placed a
allot of stress on its already limited infrture.the government of our country has become aware
about this stark reality and has been striving to create an enabling environment for investment
in infrastrure building in our country. The privet partnership have emerged as a very viable an
possible sustainable mode of creating the much needed infrastrure for our country .ppps have
been able to redefine the roll of public sector as a facilitator and enabler where as the private
sector play the roll of financial ,builder and also the operate of the service or the facilities
.ppps if implemented successfully can be rightly called and epitome of operational efficiency
,innovative technologies ,managerial effectiveness access to additional finances. Rather they
help to combine and draw upon the best features of public and private sector to render
services of international stands. However the picture is thornier then it appears. In spite of the
success which the ppp modal has mate with in our country much is left to be desired .along
with the advantages of the ppp projects, the negativities have also surfaced in the form of
various boatel necks and challenges. These need to be resolved with more focused
tetanisation and police formulation by the introducing more transparency , development of
nation sense and raising above vested interests.

REFERENCES
1. Mckinsey & company, inc.’building india –accelerating infrastructure
projects
2. www.ibef.org
3. Articles.timeso findia. Indiatimes.com
4. www.dnb.co.in/infrastructure 2008
5. www.mbaskool.com/businessarticles
6. Academiceventplanner.com/lead2009

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