Policy Glitches Impeding PPP projects; Overhaul needed
With innumerable glitches seen in the policy of Public-Private Partnerships (PPP) for infrastructure projects, there is an urgent need for reviewing the model, with an overhaul on the cards. In its current form, the model is skewed, resulting in uncertainty with projects as well as inordinate delays, thereby denting investor confidence.
Glitches faced by Highway PPP projects:
Issues related to glitches in PPP projects in highways can be taken as a pointer to showcase the shortcomings faced by the model. As per policy, it is stipulated that after a road project is awarded to a concessionaire, it is imperative that land acquisition procedures should be completed by the private party of the PPP project. Besides, necessary clearances should be obtained from the Ministry of Environment and Forests. Measures should also be taken to pool up funds as well as adhere to other norms as per the policy.
It is the general norm in such cases that clearances sought from various quarters have resulted in considerable delays, thereby causing costs to shoot up. Due to these unforeseen hindrances, the National Highways Authority of India (NHAI), which is the road regulator for highways projects, has informed that about Rs.1 lakh crore of premium payments across 23 road projects have to be rescheduled, with many others as well awaiting a similar fate.
Delay in clearances, projection mis-matches act as impediments:
As is the practice in Build-Operate-Transfer (BOT) projects, the premium has to be paid by the concessionaire of the project to NHAI. This can be garnered easily during the initial stages after project completion from toll returns obtained based on the initial projections made regarding the traffic flow. However, it has been commonly seen that in many instances, projections may not be fulfilled, leading to premium payments not being met. Besides, lack of obtaining clearances in a timely manner has also resulted in projects getting sabotaged.
Pro-active approach by Govt needed:
Hence, it is imperative that the government adopts a proactive approach towards implementation of PPP projects. It is necessary for the government to do its share of the groundwork regarding securing clearances, before bids are invited for private participation. This approach would go a long way in reducing project delays, removing obstacles related to project implementation, as well as reducing cost expenditure considerably.
Streamlining policy and regulatory framework important:
There could still be a few unforeseen impediments as well as calculated risks that will need to be taken care of, like for instance regarding projected traffic flow. However, these issues would be comparatively minor, and can well be addressed admirably, once other pressing issues like clearances are obtained. Hence, it is all the more important to assuredly address issues related to streamlining the policy and regulatory framework so that infrastructure projects can be completed smoothly and in a time-bound manner.
