NEW TRENDS IN PROJECT FORMULATION - PPP

PUBLIC PRIVATE PARTNERSHIP (PPP)

PPP is a mode of providing public infrastructure and services by government in partnership with
private sector.

It is a long term agreement between government and private sector entity for provision of public
utilities and services.

PPP model is concentrated to the development of :

- National highways and state highways.
- Redevelopment of railway stations.
- Operation of container trains
- Transmission of electricity and urban metro rail
- Procurement cum maintenance agreement for locomotives
- Non metro airports, green field airports
- Port terminals
Different Types Of Execution In Project Formulation
• BOT ( BUILT OPERATE TRANSFER )
• The private partner is responsible to design, build, operate ( during the contracted period ) and
transfer back the facilities to the public sector.
• Private sector bring the finance for the projet and take the responsibility to construct and
maintain.
• The public sector will either pay a rent or allcow private sector to collect revenue.
Boot – ( Built Own Operate Transfer ) Or Boo – ( Built Own Operator )
• Ownership Of The Newly Built Facility Will Rest With The Private Party During The Period Of
Contract
• The Public Sector Partner Will Contract To Purchase The Goods And Services Produced By The
Project On Agreed Terms And Conditions
• Project Built Under PPP Will Be Transferred Back To The Government At The End Of Contract
Period And Private Partner Recovers Its Investments
BOLT ( OWN LEASE TRANSFER)
• Public sector gives a concession to a private entity to build and design a facility as well as to
own the facility, to lease the facility to the client, then at the end of the lease period, transfer
the ownership to the client.
• private entity has the responsibility to raise the project finance during the construction period.
• Bolt developer assumes all the risk
• Facilities owned by the developer until the lease period ends.
• At the end of the lease period ownership of and the responsibility for the facility are
transferred to the client from the developer at a previously agreed price.
DBOT – (DESIGN BUILT OPERATE TRANSFER)
• Private Party Contracted To Design And Build Operate With Their Own Finance Considering
Government Specification .
• Private Party Can Charge A Fee From Users. ( Like Toll Tax For Higways In India ) For A Pre
Determined Period.
• Cost And Profits Are Recovered And Then Transferred The Project To The Government.
• Later Government May Decide To Continue The Fee Or Wave It Off.
DBFO – ( DESIGN BUILT FINANCE OPERATE)
• The Private Party Assumes The Responsibility For The Design, Construct, Finance Operate And To
Maintain The Project.
• The Private Participant Will Recover Its Investment Through The Concessions Granted Or Though
Annuity Payment Etc.
• The Public Sector Guarantees To Financing Agencies, Help With Acquisition Of Land And Obtain
Statutory And Environmental Clearances And Approvals.
• It Assures A Reasonable Return Throughout The Period Of Concession.