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“longerterm contracts between public contracting authority
and private provider for delivery of specified outputs”
(typically combining investment and service provision)
• Electronic processing enables easy hand shake amongst
partners
• Different models: outsourcing discreet tasks, BOO,BOOT
• Risk transfer to private sector
– Commercial knowhow and managerial skills
– Bestpractice technologies and innovation
• Incentive for replication in other contexts
• Enhances government accountability and performance
• Entrepreneurship and local enterprise promotion
• Reduced need for public sector borrowing
Fundamental qualities of a PPP project
High priority, governmentplanned project. The project must have emerged from
a governmentled planning and prioritization process. The project must be such
that, regardless of the source of public or private capital, the government would
still want the project to be implemented quickly.
Genuine risk allocation. Shared risk allocation is a principal feature of a PPP
project. The private sector must genuinely assume some risk....
Mutually valuable. Value should be for both sides, which means government
should also genuinely accept some risks and not transfer the entire risk to the
private sector, and vice versa.
Why PPP?
Growing popularity. Since the 1990s, there has been a rapid rise of PPPs across
the world. Governments in developing as well as developed countries are using
PPP arrangements for improved delivery of infrastructure services. Governments
are building transport (roads, railways, toll bridges), education (schools and
universities), healthcare (hospitals and clinics), waste management (collection,
wastetoenergy plants), and water (collection, treatment, and distribution)
infrastructure through PPP. PPP is becoming the preferred method for public
procurement of infrastructure and infrastructure services projects throughout the
world.
Limitations of government resources and capacity to meet the infrastructure
gap. Globally, governments are increasingly constrained in mobilizing the required
financial and technical resources and the executive capacity to cope with the
rising demand for water supply, sewerage, drainage, electricity supply, and solid
waste management. Rapid economic growth, growing urban population, increasing
rural–urban migration, and allround social and economic development have
compounded the pressure on the existing infrastructure, and increased the demand–
supply gap in most of the developing world. Countries and governments, especially
in the developing world, are experiencing increasing pressure from their citizens,
civil society organizations, and the media to provide accessible and affordable
infrastructure and basic services. While the infrastructure gap is rising, government
budgetary resources are increasingly constrained in financing this deficit. The
pressure has also come from the international compact on Millennium Development
Goals (MDGs), under which country progress in terms of access to safe drinking
water, sanitation, health, etc. is being monitored. Rising costs of maintaining and
operating existing assets, inability to increase revenue and cut costs and waste,
and rising constraints on budgets and borrowing, do not allow governments to
make the required investments in upgrading or rehabilitating the existing
infrastructure or creating new infrastructure.
Need for new financing and institutional mechanisms. The political economy
20 Facilitating Public Private Partnership
PPP strengths and effectiveness
• robust and dynamic structure;
• government in an enabler role;
• government ownership is high;
• governance structure ensures consumer and public interests are safeguarded;
• commercial interest protected;
• domicile risks to parties that are well equipped to deal with them;
• transparent and wellconceived contracts;
• documentation recognizes rights and responsibilities of all projectrelated
parties;
• concerns of all stakeholders addressed;
• involves participation of a large number of institutions: government, politicians,
banks, financial institutions, investors, contractors, consumers, NGOs, etc.
— Government of Tamil Nadu presentation
1)BOT type
example: 1
On North South & East West Corridor Phase II projects
Implimented in ......Kerala
Six lanning of Vadakkancherry Thrissur section
Private partners.....KMC Construction Ltd. Consortium(Indianchina )
...... ICT Pvt Ltd .(Indian ) (Supervision Consultant )
Public partner......Highways (Department of Road, Transport and Highways)
total length.... Km 240 to km 270
Project cost in Rs. Crore ...514.05
Expansion of NH 47
Example: 2
contract of Thrissur to Angamali
Private partners .....KMC Construction Ltd. SREI (JV) [Guruvayoor Infrastructure Pvt. Ltd.]
ICT Pvt Ltd (Indian ) (Supervision Consultant )
Public partner......Highways (Department of Road, Transport and Highways)
Expenditure Rs. Crs. ..572.2
Total length ...Km. 270.000 to Km. 316.70
Expansion of NH 47
Kannur Airport Project Rs. 930Cr under BOT. Clearance of Centarl Govt. Pending.
Kochi Metro Rail Project Rs.1966Cr on BOT basis. EOI floated.
2)BOOT
Example:1
Rajeev Gandhi International Airport
Total Project Cost is Rs 2478 crs
Project area is about 5495 acres
project partners:Govt of India (13%), Govt of Andhra Pradesh:
BOOT Format – Build Own Operate transfer
Concession period is 30 yrs
Concession fee is 4% of Gross Revenue Annually
Commenced operation from Mar 2008
42 aircraft parking stands 12 boarding bridges
Modular Cargo Terminal initial capacity 100,000 MT/year
146 Checkin counters including 16 self checkin kiosks
Modern Air Traffic Control tower 75m high
Rajiv Gandhi Hyderabad International Airport
State....Andhra Pradesh
The airport project is a publicprivate joint venture between GMR Group, Malaysia Airports
Holdings Berhad and both Government of Andhra Pradesh and Airports Authority of India (AAI).
GMR Group holds 63% of the equity, MAHB 11%, while the Government of Andhra Pradesh and
Airports Authority of India each hold 13%.
Private partners .....GMR Group(is a major infrastructure company in India) And
MAHB (Malaysia Airports Holdings Berhad )
Public partner......Government of Andhra Pradesh and
Airports Authority of India (AAI)
Owner............... GMR Hyderabad International Airport Ltd.
Expenditure Rs.Crs .....2487.00
Example:2
eSeva(Common Service Center)
State....Andhra Pradesh
Contract Period.......5 years
Public partner.......Information Technology & Communications(Government of Andhra Pradesh)
Private partners.....SPANCO .LTD(Designed Developed & Maintained)
CMS Computers & Ram Informatics(Technical Partner)
Why ppp
More number of Outlets / Delivery Channels at no / extra cost
Extended hours of service at no extra cost
Extended hours of service at no extra cost
Reduced cost of service
Online and real‐time data updation and monitoring
Reduced interface between citizen and Government
– Department Staff can focus on core functions
Improved efficiency in service delivery
Higher levels of citizen satisfaction
3)BuildOwnOperate (BOO)
eProcurement
State.....Andhra Pradesh
The Government of Chhattisgarh after procuring the solution has implemented the eProcurement
project using the Public Private Partnership (PPP) model and the solution is being deployed on a
BuildOwnOperate (BOO)
Objective
The prime objectives of eprocurement are demand aggregation, reduced inventory cost, consistent
procurement procedures across departments, re duction in cost of procurement, fair and equal
opportunities to all suppliers and efficient tendering processes.
Private Partner......A consortium, lead by M/s C1 India Pvt. Ltd.
Public Partner ......Information Technology & Communications(Government of Andhra Pradesh)
Contract Period.......5 years
Example:2
Sector .......Energy
Reliance supply gas to the AP Gas Power Corporation Limited
Private Partner...... Reliance
Public Partner ......AP Gas Power Corporation Limited
Investment......Cr.Rs. 141+414(For phase 1 And Phase 2)
State.....Andhra Pradesh
Smart City in the IT/ITES sector which envisages setting up of a technopolis and township Rs
1600 Cr.Kochi, BOO basis
4)JV
Example 1
Vizhinjam International Container Transshipment project .
The government's equity, in the joint venture company, which would implement the port
would be 24%. The private partner for implementing the project has been short listed vide a bidding
process. Government has sought the security clearance of GoI from the angle of national policy for
the foreign companies to participate in the project. Request submitted for funding under viability
gap
scheme to the tune of Rs.200 Cr.
Example 2
Nanotech Silicon India Private Limited
Govt. of AP entered an MoU with South Korean firm on 6.12.2004 as lead promoter for
establishing Semi Conductor Fab 50 Acres of land free of cost at Srinagar Village. JV Company
was incorporated as Nonotech Silicon India on 25.4.2005 Wireless communication chips, PC
Chips, Digital Consumer Electronic Chips, Automobile. Products are Memories – embedded, High
Speed, flashes
Estimated Cost : 650.00 million USD
0.067% of total equity by APIIC Andhra Pradesh Industrial Infrastructure Corporation
Ltd.
as Nodal Agency
SPA/Hotel & Training Center
Area 14.94 Acres of Nanakramguda Village, Serilingampally Mandal, R R District handed
over to Tourism Department on 772005
Government JV with IHHR Hospitality (Andhra) Private Limited
Equity Government : IHHR 26:74
Estimated cost Rs.100.00 Crore
BOMT
Total Computerisation of Motor Vehicles Department under FAST Project, Rs.47.98 Cr under
BOMT, Private Promoter short listed through EoI and Bids.
Built Operate Share and Transfer basis (BOST)
Krishnapatnam Port
Developer is M/s Krishnapatnam Port Company Limited.
Project cost of Phase – I Rs 1400 crs
Project cost of Phase – II Rs 4000 crs
Estimated cost of Phase – III Rs 5000 crs
Built Operate Share and Transfer basis (BOST)
Contract period is 30 years with further extention of 20 yrs
Lease Rentals is 2% of the fair market value with yrly escalation
Concession fee is 2.6% of the Gross Income for 30 yrs
Government has provided four lane approach road to the Port,
Power Supply, R&R. The total cost is Rs 159 crs