PPP

Public Private Partnership
By Nishant Saluja

What is PPP?
y

In Broad terms, PPP refers to an arrangement between the public and private sectors with clear agreement on shared objectives for the delivery of public infrastructure and/or public services

of India y A Partnership between a public sector entity (sponsoring authority) and a private sector entity for the creation and/or management of infrastructure for public purpose for a specified period of time .Definition By Govt.

Areas Of Public Private Partnership Infrastructure and Development Housing And Urban Development Development Of Facilities Transportation .

Risk Allocation Public Shared Private Land Acquisition Connectivity Permissions & Authorizations Regulatory Risks Political Risk Change in Laws [Financial Support] Volume Risk Inflation Risk Design Construction Commissioning Operating Performance Project Finance Technology Obsolescence .

PPP Variants Public Private partnerships in infrastructure and service provision can take various forms such as y y y y y BOT BOOT BOLT BOO BOM .

operates the facility for a specified time period under a contract or franchise agreement with the agency. which enables direct private sector investment in large-scale infrastructure projects y .BOT (Build Operate Transfer) y The private partner builds a facility to the specifications agreed to by the public agency. and then transfers the facility to the agency at the end of the specified period of time. BOT is a relatively new approach to infrastructure development.

BOOT( Build Own Operate Transfer) y A BOOT is a concession contract . build. . own and operate a power project for a designated period of time. after which the ownership of the project is transferred to the government without compensation. The government entity selects a private company to develop. finance.

Stages Of BOOT Project BUILD: y Design y Manage project implementation y Carry out procurement y Finance y Construct OWN: ‡ Hold interest under concession OPERATE: ‡ Manage and operate facility ‡ Carry out maintenance ‡ Deliver products/service ‡ Receive payment for product/service TRANSFER: ‡ Hand over project in operating condition at end of concession .

y BOLT have failed to take off due to the poor contracted work prevalent and high cost of construction. leases out the operating portion of the contract and on completion of the contract returns the facility to the owner. y .BOLT (Build Own Lease Transfer) The company builds a facility.

The developer may be subject to regulatory constraints on operations and. in some cases. pricing. .BOO ( Build Own Operate ) y The Build-Own-Operate (BOO) project operates similarly to a BOOT project. except that the private sector owns the facility in perpetuity. The long term right to operate the facility provides the developer with significant financial incentive for the capital investment in the facility.

BOM ( Build Own Maintain) y This type of arrangement involves the private sector developer building. The Government leases the facility and operates it using public sector staff. owning and maintaining a facility. .

Advantages Of PPP Frees limited Public Finances for other priorities y Helps remove key economic bottlenecks y Improved service delivery and efficiency y Enables access to private sector resources in technology and managerial skills y Access to long-term financing y Shifts risk to the private sector y .

288 66.467 17.110 19.111 1.601 93 .499 2.Public Private Partnerships in India Sector Roads Urban Development Ports Tourism Energy Airports Education Railways Projects 271 73 43 29 24 5 4 1 Values ( in Cr) 102.005 15.

Examples Of Urban Development Initiatives .

. 571 crores.63 kms No of Stations : 83 Total length : 189.63 kms Total cost for Phase 1 : Rs.10.Delhi Metro Rail Delhi Metro is being built and operated by the Delhi Metro Rail Corporation Limited (DMRC) Phase I Network No of lines :3 Total length : 65 Kms No of Stations: 59 Phase II Network No of lines : 10 Total Length : 124.

Mumbai Metro Rail Metro Master Plan was prepared with the help of DMRC (Delhi Metro Rail Corporation).092 Cr .5 km Total Cost : 47. IIT Mumbai and TCS in the year 2003 Phase I : 3 lines Phase II : 2 lines Phase III : 4 lines Total Length : 146.

Airports in India .

2008 ‡ Project cost:` 2.478 crores ‡ Investment pattern: .GMR Rajiv Gandhi International Airport (Hyderabad) Greenfield Project ‡ Type of PPP: BOOT ‡ Concession period: 30 years ‡ Project period: 2005 .

800 cr ‡ Investment pattern: .Chattrapathi Shivaji International Airport ( Mumbai ) Brownfield Project ‡ Type of PPP: BOOT ‡ Concession period: 30 years ‡ Project period: 2004 2010 ‡ Estd. Project cost: 5.

PPP for Highways .

630 crores Land acquisition: 1.030 Ha* Operation & Maintenance: Ideal Road Builders (IRB) * Ha = Hectares .MumbaiMumbai-Pune Expressway Greenfield Project ‡ ‡ ‡ ‡ ‡ Length of Expressway: 95 km Type of PPP : BOT (30 years) Project Cost : 1.

300 km Kashmir to Kanyakumari -4000 km (with a spur to Cochin) and Silchar to Porbandar.5.NHDP Plan (Future) The main components of NHDP (National Highway Development Project) include: Golden Quadrilateral (GQ) Length :. Chennai and Mumbai North-South & East-West Corridors Length :.846 km Connecting Delhi. Kolkata.3300 km .7 .

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