Beruflich Dokumente
Kultur Dokumente
Submitted To: -
Submitted By:-
Reeta Rautela
Sourabh Choudhary
Faculty of Economics
B.A.LLB IV thSEM
Acknowledgment
I have taken efforts in this project. However, it would not have been possible without the kind
support of and help of many individuals and my teacher Mrs. Reeta Rautela. I would like to
extend my sincere thanks to all of them.
I am highly indebted to Siddhartha Law College for their guidance and constant supervision
as well as for providing necessary information regarding the project & also for their support
in completing the project.
I would like to express my gratitude towards my parents, my teacher and my friends for their
kind co-operation and encouragement which helped me in completion of this project.
Contents
Introduction........................................................................................................... 4
What is a PPP?....................................................................................................... 5
Development of PPPs in India................................................................................8
Why Public-Private Partnerships?...........................................................................9
Legal and institutional frameworks for PPPs at the national level........................10
Committee on Infrastructure............................................................................... 10
India Infrastructure Finance Company Limited (IIFCL).........................................12
India Infrastructure Project Development Fund (IIPDF)........................................13
Introduction
Infrastructure shortages are proving a key constraint in sustaining and expanding Indias
economic growth and ensuring that all Indians are able to share in its benefits. To meet this
government ultimately bears responsibility even if the task of delivery has been contracted
out
What is a PPP?
There is no widely accepted definition of a Public Private Partnership (PPP). In broadterms,
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. It is an
approach that public authorities adopt to increase private sector involvement in the delivery
of public services. In many countries, PPPs are now a central feature of ongoing efforts to
modernise public services and infrastructure.
The main features of PPPs include:
Cooperative and contractual relationships
PPPs represent cooperation between the government and the private sector. PPPs are not the
same as privatisation in that both public sponsors and private providers function as partners
throughout project development and delivery, and often in operation and maintenance. The
most successful partnership arrangements draw on the relative strengths of both the public
and private sector in order to establish complementary relationships between them. PPP
arrangements are long-term in nature, typically extending over a 15 to 30 year period. This is
a factor which helps to which establish productive and lasting relations between the public
and private sectors. Demonstrating an enduring public sector commitment to the provision of
quality services to consumers, under terms and conditions agreeable to both the government
and the private sector, PPPs are used to develop and operate public utilities and infrastructure.
These collaborative ventures are built around the expertise and capacity of the project
partners and are based on a contractual agreement, which ensures appropriate and mutually
agreed allocation of resources, risks, and returns
Shared responsibilities
While the specific responsibilities for delivery will vary according to each project, a key
feature of PPPs is that these responsibilities will be shared between the public body and the
private consortium. In some initiatives, this might require the private sector company to
play a significant role in all aspects of delivery of the service, while in others its functions
may be more limited. However, unlike instances of privatisation, the overall role of
government remains unchanged in a PPP: it is the government which remains ultimately
accountable and responsible for the provision of high quality services that meet the public
need.
A method of procurement
PPPs are instruments for government bodies to deliver desired outcomes to the public sector,
by making use of private sector capital to finance the necessary assets or infrastructure. The
private company is rewarded for its investment in the form of either service charges from the
public body, revenues from the project, or a combination of the two. This renders affordable
those projects that might not otherwise have been feasible, because the public body was
unwilling or unable to borrow the requisite capital. PPPs allow the private sector to play a
greater role in the planning, finance, design, operation and maintenance of public
infrastructure and services than under traditional public procurement models. Moreover,
where traditional procurement models begin with the question of what assets the public body
has as its disposal and how these might be used to deliver required services, PPP
arrangements place the emphasis on the desired service or outcome as identified by the public
organisation and how the private sector might help to make this happen.
Risk transfer
A key element of PPPs is their potential to deliver public projects and services in a more
economically efficient manner. At the beginning of the relationship, potential risks associated
with the project are identified and each party adopts those which it is best equipped to
manage. The public sector can therefore transfer appropriate risks to the private partner, who
has the necessary skills and experience to manage them. For example, overall risk to the
public sector can be reduced by transferring those associated with design, construction and
operation to the private partner. The incentive for the private body comes in the form of
higher rates of return related to high standards of performance.
Flexible ownership
PPPs enable flexible arrangements between public and private bodies, where the public body
may or may not retain ownership of the project or facility that is produced. In some cases, the
private organisation may be contracted only to construct facilities or supply equipment,
leaving the public body as owners, operators and maintainers of the service. Alternatively, the
public sector may decide it is more cost-effective not to own directly and operate assets, but
to purchase these instead from the private entity. Services may be purchased for use by the
government itself, as an input to provide another service, or on behalf of the end user.
The Government of India defines PPPs as:
A partnership between a public sector entity (sponsoring authority) and a private sector
entity (a legal entity in which 51% or more of equity is with the private partner/s) for the
creation and/or management of infrastructure for public purpose for a specified period of time
(concession period) on commercial terms and in which the private partner has been procured
through a transparent and open procurement system. (Department of Economic Affairs,
Ministry of Finance, Government of India, 2007a)
Other commonly cited definitions of PPPs include:
The International Monetary Fund (IMF): Public-private partnerships (PPPs) refer to
arrangements where the private sector supplies infrastructure assets and services that
traditionally have been provided by the government. (IMF 2004, p4)
The World Bank: PPP programs are projects that are for services traditionally provided by
the public sector, combine investment and service provision, see significant risks being borne
by the private sector, and also see a major role for the public sector in either purchasing
services or bearing substantial risks under the project. (World Bank 2006, p13)
The Asian Development Bank (ADB): PPPs broadly refer to long-term, contractual
partnerships between the public and private sector agencies, specifically targeted towards
financing, designing, implementing, and operating infrastructure facilities and services that
were traditionally provided by the public sector. (ADB 2006, p15)
The European Union: A PPP is the transfer to the private sector of investment projects
that traditionally have been executed or financed by the public sector (European
Commission 2003, p96). Many other countries have legally defined PPPs in order to be clear
which projects should fall under contractual relations established through PPP arrangement.
Examples of countries that have sought to define PPP arrangements in law, include (World
Bank, 2006):
Brazil, where the PPP law defines that public private partnership contracts are agreements
entered into between government or public entities and private entities that establish a legally
binding obligation to manage (in whole or part) services, undertakings and activities in the
public interest where the private sector is responsible for financing, investment and
management.
Ireland legally defines PPPs as any arrangement made between a state authority and a
private partner to perform functions within the mandate of the state authority, and involving\
different combinations of design, construction, operations and finance.
In South Africa, a PPP is defined in law as a contract between a government institution and
a private party where the latter performs an institutional function and/or uses state property,
and where substantial project risks are passed to the third party.
in the region, such as China, have been investing up to 10% of GDP in infrastructural
development. The Tenth Five Year Plan (2002-2007) projection on GCFI (at 2001-2 prices)
amounted to more than Rs 11,00,000 crore (US$250 billion). For the Eleventh Five Year Plan
(2007-12), estimates vary and continue to be revised on a regular basis and inevitably,
upwards. According to one recent estimate, India needs to increase infrastructural spending
gradually to 8% of GDP (US$ 100 billion per year) by 2010 in order to realise a sustained
growth for the broader economy of 89%.5 The most recent Ministry of Finance report,
issued in May 2007, quotes a figure of US$ 384 billion by 2012. However, even this figure
may be a considerable underestimate of the amount of capital investment required to sustain
infrastructural development during the period of the Eleventh Plan.
appeared (and will continue to widen) in funding the level of infrastructural development
required if the Indian economy is to grow at its optimum rate.
Committee on Infrastructure
The role of the CoI is to formulate and implement policies that enable the development of a
world-class infrastructure, and that promote the delivery of international-standard public
services. Key elements of this role involve the initiation of structures which maximise the use
of PPPs, and the close monitoring of specific infrastructure projects. The CoI is supported in
this role by the Empowered Subcommittee, whose task it is to formulate, review and approve
policy papers and proposals for submission to the CoI, as well as to follow up and oversee the
implementation of its policies. In addition, the CoI has established a Committee of
Secretaries tasked with preparing and implementing an Action Plan for developing adequate
road and rail links for Indias major ports.
amounts exceeding Rs 200 crore will be sanctioned by the Empowered Committee with the
approval of the Finance Minister.