Friday, 14 April 2017

Utility of PPP model in Tourism Infrastructure and Capacity building

PPP refers to Public Private Partnership. In India, PPP has had a mixed experience. 
According to the performance, it is divided into 3 categories:
  1. Overall successful
  2. Failure for both the parties
  3. Failure for one of the parties e.g Nhava Sheva Port in Mumbai and NOIDA DND Toll road
Despite its assessment as a ‘Not so good’ tag as per Planning Commission of India, PPP pundits analyse that Private participation as a partner is here to stay. The primary cause is that neither the Government is short of funds nor is it shirking from its responsibilities. In fact, Government is seeking better management through PPP and it understands that addressing ‘Time overrun’ and optimum use of Government resources including transferring risk to the private partner to a reasonable extent. State of the art technology and ‘Value for money’ are another factors that keep compelling policy makers in Government to keep faith in the PPP mode. 

PPP model: Public Private Partnership
PPP is a popular model of governance all over the world

Factors that have hindered PPP in the past: 

Some factors have hindered PPP Projects in the past are as follows:
  • Blame game between Government and private partner on delays on land acquisition etc. and interpretation of clauses in concession agreement.
  • Requests by private partner for frequent increase in user charges or seeking compensation on unforseen escalation of costs.
  • No institutionalised mechanism (at least, hither to) for mid term correction in concession agreement.
Despite some negative points and past failure of some PPP projects mainly in the Highway sector, PPP could be addressed by way of mid-course correction of projects with the newly created institutional mechanism.

Why is PPP model a necessity?

Let us look back into the past and see the reasons for the necessity of the PPP model. The governments in Developed/Developing/Underdeveloped countries may not be short of funds but it can hardly afford to invest public money by procuring latest technology which shall be used by its own workforce, which is not known for its optimum efficiency. There is no doubt that following  factors warrent urgent attention to improve Governance for bringing in development agenda;
  • Deficit in infrastructure
  • Inefficient service delivery 
  • Unprofessional approach. 
Here, it is to be kept in view that the private sector may bring in capital, technology, better management and can share the substantial risk of market forces etc. So, a sensible division of roles, fair sharing of responsibilities and market risks be appropriately borne by the private sectors. The expected results are “availability”, “quality” and “efficiency of services” along with “efficiency of capital utilisation”. If properly implemented, there will be “transformation from a subsidised economy to commercial economy and output based contracting”. In this way, Government resources could be better utilised with better technology, innovation and global best practices under PPP regime.

PPP model
This was the status of PPP procurement timelines in 2013 at the global level.
 Advocates against PPP model will certainly argue that PPP model resorts to more expensive (user charges etc.) or would lead to privatisation in disguise and that public employees shall lose their jobs and that it is backdoor sale of government assets. However, these arguments can be rebutted with citations based on International success stories learning and improving based on earlier mistakes, mid-term correction/review, though in a limited way. Thus, there is a need to hold a workshop for the government officials by semi government organisations like PHD Chamber of Commerce, FICCI, CII, ASSOCHAM etc so that PPP model can be made a highly successful and mutually beneficial model for all stakeholders!

 Now, question arises whether the regulator should be under the sole control of concession authority or should work like an umpire. Since last letter of P in PPP embraces Partnership, the concession authority should treat Private player/concessionaire as a partner and agree to appoint a neutral ‘Regulator’ in a transparent process.

(The creative inputs are given by Ambuj Saxena, co-founder of