We might reflect on this later in the semester, but there seems to be a gradual shift in the ways infrastructure is being viewed, moving from being transaction or deal-focused to a more holistic integration of long-term sustainability goals. This certainly seems to be the right approach to follow. However, it remains to be seen as to how we actually implement such strategies in practice, outside conferences.
Monday, August 10, 2009
PPPs in Infrastructure
The Confederation of Indian Industries, Southern Region (CII-SR) organized a conference called Suminfra on Public-Private-Partnerships (PPPs) in Infrastructure in Chennai last week. Several speakers spoke about very relevant issues that affect PPPs in India, most of which we will also discuss in our course. Dr. A. Ramakrishna, who was the president of L&T and is now an adjunct professor at IIT-M spoke of the need to re-define contractor procurement procedures, Mr. Venkatesh of L&T spoke about bringing in more flexibility into contracting mechanisms, a speaker from CRISIL described the creation of an overall project-rating system to evaluate PPP opportunities and so on. There was also an interesting presentation on PPPs in water treatment and supply by Tata Projects.
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The final sentence in your post is particularly crucial. We will have to see how much of the plans, which look big and strong in letter, materialize into physical assets which can stand the test of time. The budgetary boost to the allocations for infrastructure spending might actually clear some path to this end. It might be interesting to go through the 12 point agenda put forth by CII for faster implemtation of infrastructure projects. One interesting point made by CII is to have a infrastructure budget seperately in place of railway budget. It makes sense to me to this, the obvious advantages are that, such an exercise will help us assessing the progress made in infrastructure in a formal way. It will increase transparency and will subject the decisions made to more scrutiny which will be benificial. I never really understood the rationale behind giving railways such preferential treatment of all the infrastructure sectors anyway.
Hey Venkat......
Actually i wanted to say u yesterday only that Why railway infrastructure is given more preference in India; It is known that most of the railway minister were from North (spl Bihar, Bengal). Its a kind of experience what i felt when i spent time like 3 months in Orrisa, 3 years in jharkhand and 14 years in Bihar; and i visited like 50 villages where there were not roadways and the people used to go to some far city through railways for selling some fruits, some kind of stuff what they had in their field for their survival in such a Naxalites (a kind of terrorist group). In this area people used to Evaluate Political party through railway only very curiously. THIS IS ONE RATIONALE i.e. POLITICS In INDIA!!!
Other i think u too can guess the Power plants, BCCL's, Big production firm used to get transportation at cheap rate, and also Some days before u might have heard The railway always used to be in profit. i.e. ECONOMIC issues.
One thing you might be thinking that Due to some state Govt is giving preference then it is not like that .......Politics is everywhere but what i said was my feelings.You might not satisfied with my answer but once you will see those poor people and how much they are struggling with single rupee and how much Leaders are needing their Votes you may guess.
Anyway it depends on person and how you look it.....
I would like to express myself on an important requirement in PPP.Our government of the total budget for roadways puts in 57% for highways and gives 30% only for states which should be used on the roads which cater for 96% of the traffic we have,which include State Highways,District roads, Roads in metropolitan(which are allocated more funds)and finally Village roads.So, how much can they invest in village roads?This clearly explains that the backbone of India is not well connected to the rest.
"Most of the established private companies would try to take projects only in and around cities and they leave inexperienced companies to the rural roads"--- this was something we discussed in today's class. Can we have some plan where a company doing project around a city gets some additional benefits if they can improve the places around city or a special addition to their Qualification for the upcoming NH projects bids, if they do few quality constructions around villages?I feel a deeper research in things like this can help us improve rural infrastructure better which may not be the call of the day but surely a necessity if we are planning at Sustainable Development.
As sudheer mentioned that big companies have to be attracted to improve the rural roads. But there is a lot of potential investment capital available from those small unorganized individual contractors. why not tap it with some form of certification programme for qualification as sir mentioned about how they do in America. It also means inclusive participation in infrastructure development, better awareness of the importance of quality infrastructure to hopefully a wider public through certification programme.
Also government can take help from big companies for the certification process.
I totally agree with the point of attracting big companies to rural roads. Packaging the projects properly could lead to this. One idea is to club together n number of projects so as to make it big enough before calling in tenders. But we should also keep in mind that PPP is not an answer to everything. It is only of the plethora of ways in which a project can be structured. The ideal approach would be to get a structure PPP or otherwise which will give the greatest value to the project.
Roping in private players with a development-oriented mindset could be a tough task. For instance, in a project on slum-housing in Bangalore, I had noticed that private interest in slum development is minimal, despite the presence of formal financing agencies like HUDCO. This, in spite of the facts that the city has a booming real estate market and mandates like 20% reservation in all housing projects for LIGs were already in place.
Going on a tangent to the issue of roads, the renewed Old Mahabalipuram Road can be seens as a fine example of associated Urban Development as part of economic boom. The four-lane road has brought the fruits of boom to earlier remote areas like Sozhinganallur and Semmancheri. But let's not overlook the negative externalities that such projects might bring up. The people of Perungudi Town Panchayat, for instance, were thrown into a fight to get exempted from tolls on the daily usage of the OMR. Legal issues may sound trivial, but they gain currency when placed in a humanitarian debate.
Roping in private players with a development-oriented mindset could be a tough task. For instance, in a project on slum-housing in Bangalore, I had noticed that private interest in slum development is minimal, despite the presence of formal financing agencies like HUDCO. This, in spite of the facts that the city has a booming real estate market and mandates like 20% reservation in all housing projects for LIGs were already in place.
Going on a tangent to the issue of roads, the renewed Old Mahabalipuram Road can be seens as a fine example of associated Urban Development as part of economic boom. The four-lane road has brought the fruits of boom to earlier remote areas like Sozhinganallur and Semmancheri. But let's not overlook the negative externalities that such projects might bring up. The people of Perungudi Town Panchayat, for instance, were thrown into a fight to get exempted from tolls on the daily usage of the OMR. Legal issues may sound trivial, but at times they may hinder infrastructure planning significantly.
I do agree with venkat as it was one of the main cause of no participation in NDP phase 3 program which basically called for BOOT project for development of roads in rural sectors apart from maintenance of some stretches. There was not even a single firm to bid for it during those days. The pvt firms are for profit only, they will invest where they see avenues for profit it might be immediate for some or maximum to the near future. The aim should be to package these with some other profit making projects.
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