Evolvement of Public-Private Partnership for Development of UP

What the official syllabus says

UPPCS Main Examination, General Studies VI.

Evolvement of Public-Private Partnership (PPP) for development of UP.

Topics in detail

The word 'evolvement' asks how PPP grew in UP: why the state turned to private partners, the models it used, the sectors where it worked or failed, and the institutions and rules that now govern it.

PPP: concepts

• Meaning of public-private partnership: a long-term contract in which a private partner builds or runs a public asset or service and bears part of the risk
• Why PPP: limited public funds, private efficiency and expertise, better maintenance
• Models: build-operate-transfer (BOT, toll and annuity), design-build-finance-operate-transfer (DBFOT), build-own-operate (BOO), operation and maintenance contracts, lease, management contracts
• Hybrid Annuity Model (HAM) for highways
• Risk sharing: construction, demand, financial and political risk
• Viability Gap Funding by the Centre and the India Infrastructure Project Development Fund
• Concession agreements and their key terms

Evolution of PPP in UP

• Early phase: private power plants and toll roads
• Expressway built by a private concessionaire on a build-operate-transfer basis (the Yamuna Expressway)
• Airports: operation of Lucknow airport by a private operator under the Airports Authority of India's leasing, and the Noida International Airport at Jewar developed by a private concessionaire
• Power: private thermal plants and joint ventures with central public-sector companies
• Health: diagnostic and dialysis services, ambulance services, medical colleges
• Urban services: solid waste management, street lighting, bus terminals, parking
• Tourism and heritage: hotels and amenities at heritage and pilgrim sites
• Education and skill development: partnerships with industry for ITIs
• Agriculture: private investment in warehousing, cold chains and food parks

Institutions and rules

• Arrangements for appraising PPP projects: PPP cells in government and, for central support, the Public Private Partnership Appraisal Committee
• Role of the infrastructure and industrial development department and sector departments
• Procurement rules, bidding and the selection of private partners
• Regulators: for power, tariffs; for urban services, municipal bodies

The PPP project cycle

• Identification of a project and a value-for-money test
• Feasibility study and structuring: model, concession period, revenue source
• Bidding and award; financial close
• Construction, operation and monitoring by an independent engineer
• Hand-back of the asset at the end of the concession
• Lessons from the Kelkar Committee (2015) on revisiting and revitalising the PPP model

Issues

• Renegotiation of contracts and disputes
• Over-optimistic traffic or demand estimates
• Delays in land acquisition and clearances
• User charges and tolls: affordability and public resistance
• Accountability and transparency of private partners
• Contingent liabilities for the state

Impact on development

• Faster building of infrastructure
• Improvement in the quality of some services
• Jobs and investment
• The need for strong regulation to protect the public interest

Overlaps

Investment in UP is on Investment in UP: Issues and Impact; the transport projects on Transport Network in UP. Infrastructure for India is in General Studies III.