Beruflich Dokumente
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Development Conclave
Public Private Partnership- The Learning Curve
Urban infrastructure development
An agenda for action
Contents
Trends in urbanisation
Models of urbanisation
11
13
References
16
Abbreviations
LIG
EWS
O&M
FAR
ULB
NCT
SBD
MCA
VGF
Trends in urbanisation
The worlds urban population surpassed the rural population this year, meaning
the urban population crossed 50% led by China and India.
The diversity amongst countries though is stark, with the developed countries
having an urban population of 74%, the newly developed at 43% and the
underdeveloped at 27% (1). Indias urban population is 29% compared to the
USA at 81%, Europe at 72% and Australia & New Zealand at 87% (2).
The growth in urban population in the newly developed countries has been
and would be a key challenge by any standards. China has increased its urban
population from 20% to 36%, a whooping 16% increase between 1980 to 2000
and has added the equivalent of the urban population of 2/3rds of North America
in two decades. India would add the equivalent of another North American total
urban population over the next 25 years.
1200
1000
113
800
341
600
400
200
0
273
898
532
317
India
China
Developed regions
To put it in perspective, India will increase its total urban population in the next
two and half decades what North America added in over a century.
Clearly this scale and magnitude of urbanisation as in India and China has not
been witnessed in the history of mankind. However there is no way that this
phenomenon can be stymied, instead it is prudent to prepare for the march of
urbanisation.
Models of Urbanisation
Countries have followed distinct models of urbanisation and the requirements for
transportation, urban roads and its O&M, utilities including power, sewerage and
water stem from the model of urbanisation followed.
This is not to imply that India as a country should follow a specific model. The
implication is that states, or indeed regions within states need to have unique
models of urbanisation depending on the certain criteria elaborated subsequently.
In the Shanghai model or the Monocentric to Polycentric model, there are new
satellite towns that are self sustainable. The population density in the city centre is
1000 persons per hectare and rapidly decreases to below 50 persons per hectare
15 km from the city centre. The satellite towns mimic the same characteristics
as the Central city. The average travel time to work is about 20 minutes in the
satellite towns and the Central city with about 70% of the population depending on
public transport. Land prices in the city centre and the satellite towns are high.
The implications for policy makers is the cost of building infrastructure in these
satellite cities, the road networks, the public transport and utilities in addition to the
inter satellite city and to main city transportation.
In the European model or the Polycentric territorial development model, the crux
of the development is efficient rail and road links to the city centre. The population
density tapers off gradually from about 300 persons per hectare 1 km from the city
centre to 250 persons per hectare 10 km from the city centre. Only about half the
population use public transport. A majority of people drive about 30kms to work in
about half an hour.
The cost of providing road and rail infrastructure is high and therefore the
implication for policy makers is to provide this infrastructure as well as utilities at a
larger radius from the city centre.
The third model of urbanisation is the High Density Development of Hong Kong.
There is great stress on vertical use with population densities of 6160 persons per
hectare in a 1 km radius from the city centre to 3500 persons per hectare at a 5 km
radius. About 90% of the population uses public transport which is easily accessible
and the journey to work is short and fast typically by metro. Land prices in the
downtown and the periphery are high.
There are economies of scale for transport and utilities in this model. The implication for
policy makers is to encourage vertical use with high FARs and reasonable free space.
The chart below sums up the various models and the requirements for each:
Parameters
Polycentric territorial
development - Europe
Development
model
Development surrounding
the main city- connected
through road and rail links
Density (Persons/
ha.)
(Distance from
city center)
Distance and
travel time to
work place
% of population
depends on public
transport
70%
50%
90%
Land price
Amount of
investment
required
(utilities and
infrastructure)
The nature and amount of investment requirement for urbanisation is keenly dependent on
the model of development. This is NOT to suggest that the country as a whole has a single
model of urbanisation. The drivers for the model to be adopted vary across regions and the
criteria for determining the model of urbanisation in regions is discussed below.
Availability of land for urbanisation, the population impacted and the urbanisation push
amongst the rural population are the key factors for determining the urbanisation model.
The proxy used for land availability in rural areas is the % of rural area under double
cultivation. As the chart below shows that it varies from a high of 83.7% in Punjab to
8.7% in Gujarat.
Percentage of double cropped land to total rural land
90%
83.7%
80%
70.0%
68.4%
70%
60%
50%
40%
32.9%
30%
22.2%
21.4%
20%
12.2%
8.8%
8.7%
10%
11.8%
0%
India
Gujarat Maharashtra
Haryana
Punjab
Rajasthan
West
Bengal
Kerala
Karnataka
Andhra
Pradesh
States
Even a state may be too large a unit for determining the urbanisation model or for
analysis of this proxy. To take the example of Gujarat, some regions like Ahmedabad
have low double crop and proximity to urban centres as the chart below shows.
Gujarat % double cropped land to total rural land
35%
33.2%
30.5%
30%
25.0%
25%
21.2%
19.6%
20%
14.7%
15%
12.3%
10%
6.0%
7.3%
7.1%
5.3%
3.6%
5%
11.8%
4.1%
2.4%
2.7%
0.4%
0.4%
0.0%
Valsad
The Dangs
Surat
Double cropped rural land could also be a proxy for the inclination amongst the rural
populace to urbanise given the implication on low productivity in these areas.
Bharuch
Vadodara
Panch Mahals
Kheda
Bhavnagar
Amreli
Junagadh
Jamnagar
Rajkot
Surendranagar
Ahmedabad
Gandinagar
Sabar Kntha
Mahesana
Banas Kantha
Kachch
0%
The second proxy for land availability is the population density in the rural areas.
High rural densities coupled with high areas under double crop are clearly regions
where the Shanghai model may not be amenable.
Rural density/sq km
1,800
1,600
1,400
1,200
985
1,000
991
800
600
400
371
376
252
249
239
Andhra
Pradesh
Karnataka
Kerala
Rajasthan
Punjab
Haryana
Maharashtra
Gujarat
India
337
158
200
West Bengal
400
Gujarats example again shows that almost all districts of Gujarat have both low
double cropped cultivation coupled with low population densities and possibly most
suited for creating new satellite towns referred to as the Shanghai model in this
document. This is further reinforced by the low rural population densities and low
areas under double cropped cultivation near the existing urban areas.
1800
1665
1600
1400
1200
1000
800
600
354
400
228
200
177
166
137
174
224
141
289
187
313
409
336
198
306
198
42
Valsad
The Dangs
Surat
Bharuch
Vadodara
Panch Mahals
Kheda
Bhavnagar
Amreli
Junagadh
Jamnagar
Rajkot
Surendranagar
Ahmedabad
Gandinagar
Sabar Kntha
Mahesana
Banas Kantha
Kachch
While states and regions within the states require to adopt one of the above or an
amalgamation of these models, existing urban institutions and systems need to be
strengthened. The case made out in the subsequent pages is that the key advantage of
PPP is improving governance as much as augmentation of funds for urbanisation.
10
The Indian Prime Minister Dr. Manmohan Singh summed up the above succinctly
by stating that the PPP approach is best suited for the infrastructure sector. It
supplements scarce public resources, creates a more competitive environment and
helps to improve efficiencies and reduce costs. Our experience shows that competition
and PPPs can help in improving infrastructure.
There are two critical components in the above message. The first is that PPP improves
efficiencies, through rigorous and disciplined governance. The second critical aspect is
the more competitive environment that helps to improve efficiencies and reduces costs.
In the absence of competition PPP alone is infructuos and perhaps counterproductive
and there are several infamous examples of PPP without competitive bidding like the
Dabhol electricity plant in India by the erstwhile Enron Corporation.
There has been some debate internationally amongst PPP professionals as to what
constitutes a PPP product. The answer is as simple as it is profound, any product that
can be structured so as to have a preset milestones for project completion, measurable
quality of output that meets public objectives and pre determined measurable
performance parameters over the life of the asset, and attracts threshold investor
participation, can be structured as a PPP product.
11
There are obvious complexities in every element of the above definition, public
objectives itself has wide connotation, pre determined measurable performance
parameters for social services might be complex and threshold investor participation
itself is keenly dependent on the solicitation process.
However a generic appreciation of the issues in PPP and understanding of the gamut
or spectrum would accelerate cross sectoral competitively bid PPP by utilising the vast
body of PPP learning and implementation knowledge from sectors like transportation
and from states across India.
12
The first objective is to disaggregate the requirements for urbanisation and identify
the products where private participation is advantageous. The Technical Secretariat
has to play a stellar role to fulfil this objective. Every stage of the project pipeline
from identification, to structuring, to approval, to technical studies, to pre
qualification to bid process and solicitation would ideally be full with projects. The
gains of PPP should not be restricted to either a few sectors or a small geography.
There has to be a systematic methodology for identification of projects and
maturing them and therefore building up capacity in these departments to identify
PPP projects continuously. There are literally tens projects being identified and
matured in states that have embarked on PPP systematically like Delhi and Orissa.
Critically all of them are identified by the user departments.
The culmination of this stage is a shelf of PPP projects: A shelf of projects is not
merely a list of projects, it is a systematic and exhaustive method of identifying
projects by the user departments against a set criterion. There is considerable
rigor and discipline in the methodology and it fleshes out the regulatory, policy and
institutional arrangements required.
As the project spectrum widens there are sectors where the prerequisites for PPP
are involved. Utilities require base level studies, price determination either through
a regulatory or independent process, Standards of Quality metrices are not only
required for a non discriminatory selection process but are often breaking issues
for investors.
13
Best practices that are focused and relate to specific elements in the bid process
are intrinsic to the decision process. States like Orissa hardly had any institutional
arrangement for PPP. Today all decisions are compared against global examples. NCT
Delhi is gearing up for this milieu.
Product standardization includes structuring the product and the standards of quality
that not only meet the public parties objectives but also ensures that the process
becomes non discriminatory and reduces the uncertainty, and therefore risk, of the
private sector provider.
Not only do SBDs and MCAs facilitate the bid process by ease of approvals by
departments, but an MCA and SBD has the national best practices built into it
in addition to the local issues and therefore the document is robust and has the
experience of decades and international/national experience incorporated into it.
While several states have an Infrastructure Fund, a dedicated Urban Fund for the
Technical studies, bid process management and VGF for the Urban sector is typically
an important requirement. Design, structuring, funds flow rules and administration
rules are to be established. The management of the Fund in the initial period is crucial
to ensure the Fund meets its desired objectives.
14
While policy and regulatory issues are stressed, a breaking issue is the capacity
building of the ULBs and Urban development agencies for PPP. Most often the
absence of this capacity is the greatest impediment for PPP. Often given the
complexity and degree of difficulty this aspect is ignored. The Technical Secretariat
in the Urban department or sometimes in large ULBs is the central repository of
PPP knowledge. As volumes increase manifold, PPP transactions become more
complex and are in varied sectors, NOT only does the identification, maturing
and evaluation become more complex, the capacity requirement of each sector
becomes much more involved.
Transactions are interactive, the best learning is in managing the complete life
cycle alongwith the advisors. The capacity building methodology constitutes of the
following activities.
Experience: Activities that impart the opportunity to put knowledge into practice
particularly in the domain of expertise
Learning: Formal learning through a structured and customized curriculum that
imparts the skills and knowledge required
Coaching: Meaningful interaction that coupled with day to day feedback, counselling
and mentoring transforms experience and learning into practice
In addition there are issues over facilitating the overarching milieu by standard
documentations that accelerates the PPP process dramatically. Also just as
developed countries take decisions based on global and national best practices
states need to structure a decision process assisted by global and national inputs.
15
References
(1) Urban and Rural Areas 2005- United Nations, www.unpopulation.org
(2) Urban and Rural Areas 2005- United Nations, www.unpopulation.org
(3) Housing Needs National Urban Housing and Habitat Policy, 2007
(4) All the double crop related data and graphs are extracted from Agricultural Land use
section of www.indiastat.com
(5) All the rural density related data and graphs are extracted from Rural Population
16
section of www.indiastat.com
Contact
Mr. Jayesh Desai
National Director
Government
Government
Fax
Fax
Mobile
jayesh.desai@in.ey.com
siddhartha.das@in.ey.com
www.ey.com/india
www.ey.com/india
CII
Headquarters
Infrastructure Department
Fax
Fax
: babu.khan@ciionline.org
Web
: www.cii.in
Web
: www.cii.in
17
Notes
18
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