Postgrad Thesis: Public Private Partnerships in Urban Infrastruture Management in Indian Cities by Reeve Lopez

NICMAR PUBLIC PRIVATE PARTNERSHIPS IN URBAN INFRASTRUCTURE MANAGEMENT IN INDIAN CITIES By

NEEL DESAI

(AP20007)

DANISH HUSSAIN (AP20031) REEVE LOPEZ

(AP20038)

YASH SHARMA

(AP20059)

KEVAL TANK

(AP20080)

PGP ACM 34th Batch (2020- 2022)

A Project Work submitted in partial fulfilment of the Academic requirements for the Post Graduate Programme in Advanced Construction Management (PGP ACM)

NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH PUNE

ACKNOWLEDGEMENT

We acknowledge the generous efforts of many people throughout the entirety of the completion of this project thesis. We are very grateful to our thesis guide Dr. Vandana Bhavsar, for being such a source of guidance from the initial days right until the very end, of the completion of our project thesis. Throughout the course of research we would also like to thank Dr. Srividhya Sridharan for reviewing and giving insightful feedback on the research work. This project thesis would not be possible without the help of the various stakeholders that participated in giving us valuable support, advice, recommendations and introducing us to different perspectives throughout the duration of the research work, we extended our sincere thanks to all of you. We would also like to thank our family members for the help and support throughout the course of completion of our project thesis. Last but not the least, we would like to extend our thanks to our peers and the alumini network of this esteemed institute for always being one call away for additional mentorship or help.

NEEL DESAI (AP20007) DANISH HUSSAIN (AP20031) REEVE LOPEZ (AP20038) YASH SHARMA (AP20059) KEVAL TANK (AP20080)

Date: 24/01/2022

NICMAR PGP ACM 34th BATCH 2020-22

DECLARATION We declare that the Project Work titled “public private partnerships in urban infrastructure management in Indian cities” is bonafide work carried out by us, under the guidance of Prof.Dr. Vandana Bhavsar. Further we declare that this has not previously formed the basis of award of any degree, diploma, associate-ship or other similar degrees or diplomas, and has not been submitted anywhere else.

NEEL DESAI

(AP20007) _______________

DANISH HUSSAIN

(AP20031) _______________

REEVE LOPEZ

(AP20038) _______________

YASH SHARMA

(AP20059) _______________

KEVAL TANK

(AP20080) _______________

Date: 24/01/2022 PGP ACM- Batch (2019-2021) NICMAR Pune

NICMAR PGP ACM 34th BATCH 2020-22

GUIDE APPROVAL LETTER

NICMAR PGP ACM 34th BATCH 2020-22

EXECUTIVE SUMMARY

For projects like convention centres, transportation networks, parks of the public nature, convention centres, the idea of having a partnership between the public and the private player in the form of PPPs can help in efficient and viable execution of the project. In cases where a city government is not able to undertake building project which is capitalintensive in nature or is owing money, but an enterprise of private nature is interested in the funding aspect of the construction project, in return of profits earned after project completion through the project operations. PPP contracts usually have a period of 25 years to as long as 30 years or in some cases might extend even this timeframe. When it comes to the financing aspect of the project, the private sector contributes partly but the project requires the public sector to make payments over a period of time throughout the overall project lifecycle. Works like designing, execution and the providing funds is taken care of by the private partner whereas the public partner focusses on aspects such as setting objectives and monitoring if the objectives are met. Risk distribution, between the public and private players can be further outlined in the process of negotiation between the participating partners. Some examples of PPP projects involve, service accommodations, projects involving transportation or projects of municipal nature or infrastructure of environmental focus.

NICMAR PGP ACM 34th BATCH 2020-22

TABLE OF CONTENTS

LIST OF ABBREVIATIONS ................................................................................................ 8 LIST OF FIGURES ................................................................................................................ 9 LIST OF TABLES ............................................................................................................... 10 CHAPTER 1: INTRODUCTION ......................................................................................... 11 1.1 HISTORY OF PPP IN INDIA ....................................................................................... 11 1.2 CURRENT STATUS ..................................................................................................... 12 1.3 PRIVATE SECTOR PUSH ........................................................................................... 12 1.4 ROLE OF MULTIPLE AGENCIES .............................................................................. 13 1.5 TYPES OF PPP PROJECTS .......................................................................................... 14 1.5.1 DESIGN BUILD (DB) ............................................................................................ 14 1.5.2 DESIGN BUILD MAINTAIN (DBM) ................................................................... 14 1.5.3 DESIGN BUILD OPERATE (DBO) ...................................................................... 14 1.5.4 DESIGN BUILD OPERATE MAINTAIN (DBOM) ............................................. 14 1.5.5 BUILD OWN OPERATE TRANSFER (BOOT) ................................................... 14 1.5.6 BUILD OWN OPERATE (BOO) ........................................................................... 14 1.5.7 DESIGN-BUILD-FINANCE-OPERATE/MAINTAIN (DBFO, DBFM OR DBFO/M).......................................................................................................................... 15 1.6 ADVANTAGES AND DISADVANTAGES ................................................................ 16 1.6.1 ADVANTAGES ...................................................................................................... 16 1.6.2 DISADVANTAGES ............................................................................................... 16 1.7 OBJECTIVE................................................................................................................... 17 1.8 METHODOLOGY ......................................................................................................... 17 1.9 CHAPTERISATION SCHEME .................................................................................... 18 2.0 SCOPE OF WORK ........................................................................................................ 18 CHAPTER 2: LITERATURE REVIEW ............................................................................ 19 2.1 THE CURRENT SCENARIO ....................................................................................... 19 2.2 INDIAN PPP STATUS .................................................................................................. 20 2.3 GROWTH IN PPP SECTOR AND INVESTMENT ..................................................... 21 2.4 STATE WISE ANALYTICS ......................................................................................... 21 2.5 LEADING STATE IN PPP AND THEIR RANK ......................................................... 23 2.8 SCOPE ........................................................................................................................... 24 2.9 CASE STUDIES ............................................................................................................ 24

NICMAR PGP ACM 34th BATCH 2020-22

7 2.9.1 NH-34, KOLKATA AND PPP IN INDIA .............................................................. 24 2.9.2 SOLID WASTE MANAGEMENT CASE STUDY ON JAIPUR CITY................ 26 2.9.3 TIMARPUR OKHLA INTEGRATED MUNICIPAL SOLID WASTE MANAGEMENT PROJECT, DELHI ............................................................................. 29 CHAPTER 3: COMPARATIVE ANALYSIS OF GLOBAL AND INDIAN SCENARIO OF PPP.................................................................................................................................... 34 3.1 INTRODUCTION .......................................................................................................... 34 3.2 PPP FIGURES IN DIFFERENT COUNTRY ............................................................... 34 3.2.1 ROAD ...................................................................................................................... 35 3.2.2 PORTS ..................................................................................................................... 35 3.2.3 MUNICIPAL WASTE ............................................................................................ 36 3.2.4 SCHOOL MANAGEMENT ................................................................................... 36 3.2.5 FARMING SECTOR .............................................................................................. 36 3.2.6 GLOBAL PPP SCENARIO AND INDIA .............................................................. 36 3.3 GLOBAL PICTURE ...................................................................................................... 36 3.4 GLOBAL PRACTICES TOWARDS PPP IN INFRASTRUCTURE ........................... 40 3.5 PPP INFRASTRUCTURE DEVELOPMENT IN INDIA ............................................. 41 3.6 LESSON FOR INDIA .................................................................................................... 42 CHAPTER 4: RESEARCH METHODOLOGY AND DATA ANALYSIS ..................... 44 4.1 RESEARCH METHODOLOGY ................................................................................... 44 4.2 RESPONDENTS’ PROFILE ........................................................................................ 45 4.3 DATA ANALYSIS ....................................................................................................... 46 4.3.1 FACTOR 1: OPERATIONAL BENEFITS OF SERVICE BASED PPP ............... 47 4.3.2 FACTOR 2: IMPLEMENTATION ISSUES OF SERVICE BASED PPP ............. 49 4.3.3 FACTOR 3: FEASIBILITY /VIABILITY OF SERVICE BASED PPP ................ 49 CHAPTER 5: CONCLUSION.............................................................................................. 54 REFERENCES ..................................................................................................................... 57

NICMAR PGP ACM 34th BATCH 2020-22

LIST OF ABBREVIATIONS

DB : Design Build DBM : Design Build Maintain DBO : Design Build Operate DBOM : Design Build Operate Maintain BOOT : Build Own Operate Transfer BOO : Build Own Operate DBFO : Design Build Finance Operate DBFM : Design-Build-Finance-Maintain NH : National Highway SWM : Sewage Waste Management MSW : Municipal Solid Waste SWOT : Strength Weakness Opportunity Threat

NICMAR PGP ACM 34th BATCH 2020-22

LIST OF FIGURES

Figure 1 : Range of partnership models ................................................................................... 17 Figure 2 :PPP sector wise highlights on a global level ............................................................ 19 Figure 3 : Market Development Curve .................................................................................... 37 Figure 4 : Share of Investment in Projects by Region and Total Investment Made from 19902006.......................................................................................................................................... 40 Figure 5 : Sector Wise Share of Investment in Projects and Total Investment Made From 19902006.......................................................................................................................................... 42 Figure 6 : Data collection ......................................................................................................... 45 Figure 7 : Data collection ........................................................................................................ 51

NICMAR PGP ACM 34th BATCH 2020-22

LIST OF TABLES

Table 1 : Period wise PPP investments .................................................................................... 21 Table 2 : State wise PPP figures (Rs. in crores, as of 31st July 2011) .................................... 21 Table 3 : Top leading states and their respective rankings ...................................................... 23 Table 4 : SWOT analysis matrix for the NH-34 project .......................................................... 25 Table 5 : General information regarding the solid waste management ................................... 26 Table 6 : Project process analysis ............................................................................................ 30 Table 7: Country wise PPP statistics ....................................................................................... 34 Table 8 : Investment commitments to infrastructure projects with private participation in developing countries by sector or region, 1996–2006 (US$ millions) .................................... 38 Table 9 : Infrastructure investment needed to meet 7.5 percent annual economic growth in South Asia (% of GDP)............................................................................................................ 39 Table 10 : KMO and Bartlett's Test ......................................................................................... 46 Table 11 : Factor Analysis ....................................................................................................... 47 Table 12 : Total variance ......................................................................................................... 50 Table 13 : Reliability statistics................................................................................................. 51

NICMAR PGP ACM 34th BATCH 2020-22

CHAPTER 1: INTRODUCTION 1.1 HISTORY OF PPP IN INDIA It's hard to say when the public-private partnership movement in India started. The history of PPP may be dated directly to the private investment of British pounds in Indian railways in the later 19th century. By 1875, Industries had invested around £ 95 million in India's promised railroads. Likewise, private electricity producers and distributors began to emerge in Calcutta (Calcutta Power Supply Corporation) and Mumbai in the early 1900s, dating back to when Tata played a key role in establishing the Tata hydropower company in 1911, and we can speculate that this was when the PPP movement began. The central government proposed a proposal in 1991 to create an independent power generation business structure that would be accessible to private investment. In 1995, the National Highway Act of 1956 was revised to promote private sector investment. In 1994, eight mobile telecommunications carriers in 4 cities and 14 operators in 18 state districts were licenced through a bidding process. Some of the earliest PPPs in India – •

The Great Indian Peninsular Railway Company (1853)

•

The Bombay Tramway Company’s tramway services in Mumbai (1854)

•

PPP Power generation and distribution projects, Mumbai and Kolkata.

In a country like India, despite major obstacles, PPPs have a big future. Long term strategies should be implemented to create scenarios of quicker project finishes and have a comparatively larger private sector investment. To encourage additional private sector participation and a faster completion of the project, a long-term sustainable infrastructure strategy must be devised. In emerging countries, PPPs have become the preferred method of constructing infrastructure projects. Because most governments in emerging economies are facing funding challenges, PPPs provide a mechanism for them to address development challenges. PPP not only provides more resources, but it also allows the public and private sectors to showcase their respective skillset, resulting in the construction of more efficient infrastructure and service delivery.

NICMAR PGP ACM 34th BATCH 2020-22

12 However, the PPP model has its own share of probable issues, as obtaining investment for the private player is hard. There is a requirement for not just an effective regulatory condition for investment for the private sector, but also a positive return on investment. As a result, the Indian government has emphasized on establishing tools and initiatives to encourage participation of the private sector in India under the PPP model.

1.2 CURRENT STATUS As of August 2012, there were 881 public private partnership projects worth over 5.4 trillion in India. •

Roads dominate India's PPP scenario, accounting for 52% of all public private partnership projects.

•

In several industries, like as transmission and distribution, water and sewage, and railways, public-private partnerships are necessary. These are resource-constrained sectors that necessitate efficient service delivery.

•

We must concentrate our efforts in the social sector, particularly in the areas of health and education. It presently accounts for barely 3.7 percent of India's PPP investments.

1.3 PRIVATE SECTOR PUSH •

In the 12th Five-Year Plan, 2012-2017, the private sector will contribute to infrastructure expansion. The Indian government recognises the significance of speeding infrastructure development by including more private sector players in order to boost the country's sluggish economy.

•

The Planning Commission predicts investment in infrastructure will almost twice in Plan 12 to 55.7 trillion, compared to 24.2 trillion in Plan 11 (2007-2012).

•

Of this total investment, 48% comes from the private sector, accounting for 36% of the investment in the 11th Plan.

NICMAR PGP ACM 34th BATCH 2020-22

1.4 ROLE OF MULTIPLE AGENCIES Multilateral infrastructure development institutions add considerably to increasing investment demand and encouraging private sector engagement. The trend of financial assistance has transitioned away from the public infrastructure projects and toward private-sector projects. Environmentally friendly infrastructure developments are promoted by these companies. Infrastructure projects receive financial and advisory support from multi-national agencies. They provide a reliable source of long-term investment as well as a robust PPP expertise base. They give technical assistance (TA) to the government and assist in the establishment of publicprivate partnerships (PPPs) at the national and state levels through capacity building. They've come up with innovative means to fund infrastructure development over the years, such as multi-tiered funding and national currency loans. The World Bank also contributes to infrastructural growth through financing, dialogue, analysis, private sector participation, and capacity building. Infrastructure Finance India Ltd is also supported financially by the bank. The World Bank proposes to invest $1.1 billion towards the construction of escalators, elevators, and walkways at suburban train stations in Mumbai. The World Bank's private sector finance arm, the World Bank Group, has established the India Infrastructure Fund to invest in a wide range of projects. •

These organisations distribute funds based on their objective to promote comprehensive growth and development by reducing poverty. The rigorous social and environmental norms to which these agencies comply can often make it difficult for the private sector to acquire financing. The following are some of the fundamental rules that multilateral agencies must follow while negotiating PPP contracts:

•

The project induced attraction should stop between the private investors and the lucrative concessional loans in commercial areas.

•

It must adhere to the utmost warranty compliance and corporate governance guidelines.

•

It should encourage low-carbon development and clean technology advancements.

NICMAR PGP ACM 34th BATCH 2020-22

14 •

As per the increasing demand of infrastructure in India, an important role could possibly be played by multilateral agencies in filling the gap with respect to infrastructure and boosting the national level growth.

1.5 TYPES OF PPP PROJECTS 1.5.1 DESIGN BUILD (DB) Public player: Operation and maintenance Private player: Design and Building

1.5.2 DESIGN BUILD MAINTAIN (DBM) Public player: Operations Private player: Design, Building and Maintenance.

1.5.3 DESIGN BUILD OPERATE (DBO) Public player: Operations Private player: Design, Building and Maintenance.

1.5.4 DESIGN BUILD OPERATE MAINTAIN (DBOM) Public player: Transfer of entire facility to public player. Private player: Design, Building, Procurement, Operations and Maintenance.

1.5.5 BUILD OWN OPERATE TRANSFER (BOOT) Public player: Transfer of entire facility to public player. Private player : Design, Building, Operations and Financing.

1.5.6 BUILD OWN OPERATE (BOO)

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15 Public player : Transfer of entire facility to public player need not be the case. Private player : Design, Building, Financing, Operations and Maintenance. The private player may retain the facility.

1.5.7 DESIGN-BUILD-FINANCE-OPERATE/MAINTAIN (DBFO, DBFM OR DBFO/M) Public player : Transfer of entire facility to public player upon completion of the lease term. Private player : Design, Building, Financing, Operations and Maintenance. There also exists models where PPP can be used for existing services and facilities, some of them include:

1.5.7.1 SERVICE CONTRACTS In this contract, a private entity is contracted by the government to render services that were previously performed by the government.

1.5.7.2 MANAGEMENT CONTRACT In this contract, the private entity operates and maintains the project.

1.5.7.3 LEASE In this contract, a leasehold entity in an asset is provided by the government. The asset is operated and maintained by the private entity as per lease terms.

1.5.7.4 CONCESSION Public player : Ownership of the project. Private player : Design, Building, Operations and Maintenance as per performance requirements outlined by the private player. Right to ownership of improvements during this period.

1.5.7.5 DIVESTURE In this contract, an asset, will be transferred either fully or partially by the government. Generally certain conditions will be included by the government with the sale of the asset to ensure that citizens will continue to be served and there will be improvement in due course of time.

NICMAR PGP ACM 34th BATCH 2020-22

1.6 ADVANTAGES AND DISADVANTAGES 1.6.1 ADVANTAGES PPP projects benefit the public partner as well as the private partner. The public players benefit from the technology and the innovation that the private sector offers thus, enhancing the operational efficiency of the services provided. The private sector gains from the incentives which the public sector provides which avoids time overruns and also mitigates possibility of the resultant cost overruns. This economic diversification increases competition and makes the country more capable of producing tier 1 quality standards of infrastructure and real estate services. Additionally, creating this condition of economic diversification helps in the country turning into a competitor in terms of facilities especially in the infrastructure sector and in addition to that boost is given to the construction, supporting services and other ventures.

1.6.2 DISADVANTAGES It is possible that the private partner may suffer risks in engaging in public-private partnerships and the construction risks associated with infrastructure projects such as roads, railways, ports, airports, or smart city development. There is also the risk of demand that will materialise post project completion and may lead to losses in service projects like tunnels, bridges, or toll roads. However, risk transfer to the public partner will be possible on payment of a nominal fee. If the project delivery is done after the stipulated time and is delayed, exceeds the estimated cost, or bears defects of technical nature, the burden is borne by the private party involved. If the public private does not provide the service promised post project completion the private party suffers consequently. Additionally, from a taxation point of view PPPs can pose risks, they are favoured and protected by private operators and this leads to a compromise and loss of accountability to the

NICMAR PGP ACM 34th BATCH 2020-22

17 public service by missing out important details, violating civil rights and providing services of poor quality. Public Private Partnerships can also pose risks from the general public and taxpayer’s point of view, they can get insulated by the private operators partnership with the government and this results in a compromise that lead to the loss of accountability to the public service users by cutting too many corners, violating peoples civil rights and providing services of poor quality. There is also the possibility of creating complex principal-agent problems. There is possibility of corruption as the rights for ownership and decision making are separated. This leads to corrupt dealings.

Figure 1 : Range of partnership models Source : William Kittredge, public-private-partnerships

1.7 OBJECTIVE The objective of this study is to study PPP models, their implementation and to check for opportunities for new sectors where the use of PPP can add value and improve workflows, processes and reduce limitations that would lead to high quality development.

1.8 METHODOLOGY The study will be conducted using primary data obtained form survey and interview with relevant industry experts, further data analysis will be done using statistical tools and a conclusion will be drawn based on the output generated.

NICMAR PGP ACM 34th BATCH 2020-22

1.9 CHAPTERISATION SCHEME The first chapter describes introductory material describing the idea of PPPs, their types, advantages and disadvantages, the current status of PPP projects and current developments with respect to PPP projects. The second chapter includes literature review that includes the development and the stage at which PPP projects are implemented in India and their state wise developments and also various case studies that show the implementation of the same. The third chapter showcases a comparative analysis between the development of PPP projects in India and PPP projects implemented at a global level and the various characteristics of the implementations of such schemes. The fourth chapter includes the data collection and data analysis aspects and also the various tests performed and the meaning behind the test and their relation to the objective of the study. The fifth chapter comprises of the conclusion.

2.0 SCOPE OF WORK India has a greater number of infrastructure-based PPP projects such as motorways, airports, bridges, ports, and so on. However, there has been a dearth of service utilitybased PPP projects such as sewage disposal, power, and water supply, and there are prospects for such projects to be implemented. In such a situation, an introspective approach is required that carefully examines the various models implemented in other developed countries, the reasons for investment in the service utility sector, their relevance to the Indian context, identifying various opportunities and matching them with India's revenue generation needs, and fine-tuning the implementation of these models as per the Indian context, resulting in successful implementation.

NICMAR PGP ACM 34th BATCH 2020-22

CHAPTER 2: LITERATURE REVIEW 2.1 THE CURRENT SCENARIO The global recession has altered the landscape for privately owned infrastructure projects in developing countries. With the crisis reducing and investment resuming in the second half of 2009, developing country economies saw a ray of hope. However, as with the Asian financial crisis, it is evident that the 2008-09 recession will have a long-term influence on individual participation in infrastructure even after crisis has ended. Governments will need to alter their PPP plans to account for a fall in appetite for risk, debt-to-equity ratios, and other factors when the global economy recovers. Before the second half of 2008, private infrastructure investment is expected to keep its upward trend from the preceding half-decade. Investments have become more equitably spread throughout sectors, having previously been mainly centred on successful telecommunications investments. It's also becoming more geographically varied, with higher shares of low-income countries than ever before, mainly in Sub-Saharan Africa and South Asia. And the investment market is growing. Investment in prime time surpassed the 1997 peak in 2007 (the most recent year for which complete figures are available). All emerging nations had an increase in investment, with the exception of Africa, where it stayed near record levels. This number surged by 80% across Central Asia and Europe.

Figure 2 :PPP sector wise highlights on a global level Source : Assets publishing service

NICMAR PGP ACM 34th BATCH 2020-22

PPPs are increasingly being used to convert global development funds. Several governments, notably the World Bank for Economic Cooperation and Development and the European Investment Bank, receive funding for PPP initiatives from businesses. Infrastructure, such as transportation, water, and telecommunications, receives a substantial share of these organizations' investments, which are fully based on PPPs. Chile, for example, has increased infrastructure investment to 5% of GDP by encouraging private sector involvement in major infrastructure areas.

2.2 INDIAN PPP STATUS While non-public participation may have included a few positive instances in British and postindependence technologies at one point, the PPP movement as we know it today began. While energy technology became available to the general population in the 1990s. Through an important modification under the National Highways Act 1956 in 1995 that allowed non-public family, licences were awarded to eight mobile phone carriers in the private sector. That changed in 1997, when Infrastructure Development Finance concluded that the move had been given a boost and that the government was serious about affecting private investments. Control, monitor, and comprehend the evolution of the infrastructure of India. According to Vinayak Chatterjee (2012), the economic base of China has quadrupled in terms of economy with respect to that of India, whereas when it comes to PPP involvement India is ten times ahead of China. It's very possible that it's the largest PPP marketplace on the planet. Credit ratings for these accomplishments must also correspond to our version of the suitable licencing environment that has been established in the US. In addition to the instances given above, several new laws were adopted in 1990 in the United States of America, making the atmosphere highly suitable to non-public engagement. Various laws, such as the Electricity Law, 2003; India's National Highways Authority Act, 1995, as amended; Law on Special Economic Zones, 2005; as well as many new facilities, such as telecommunications, electricity, and airport management government, an imposing government, and organisations currency as infrastructure There was also the establishment of a development financing business, and so on.

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21 A number of unique monetary efforts, including as Sustainability Gap Financing (VGF), annuity programmes, and debt availability stimulus, have also prompted the private sector to invest more in infrastructure through the model of Public private partnerships. Major bodies of public players played their roles, as did major capacity building in a number of states, across India. This is quite promising. This is an excellent vantage point from which to "make PPP a reality."

2.3 GROWTH IN PPP SECTOR AND INVESTMENT Table 1 : Period wise PPP investments Period

Approximate InfrastructurePPP investments

Estimated PPP

infrastructure

investment 10th Plan

9061.0

2252.0

25%

11th Plan (Revised) 20542.0

7429.0

36%

12th Plan (Projected) 40992.0

20496.0

50%

Source : Irjet The table depicts a significant growth in the number of PPP investments in India throughout the 10th, 11th, and 12th plans. It has risen from 25% in the tenth plan to about 50% in the twelfth. This demonstrates that India's efforts to create a favourable climate for PPPs have worked well, as seen by the private sector's growing involvement in the domain of roads, highways and other related projects.

2.4 STATE WISE ANALYTICS Table 2 : State wise PPP figures (Rs. in crores, as of 31st July 2011) Sr State

Total

Number

Based on Between 100 Between 251 More than Value of 100 Cr

and 250 Cr to 500 Cr

500 Cr

Contracts

Projects 1

Andhra

1,484.60 2,197.80

7,062.30

56,173.70 66,918.30

Pradesh

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22 2

Assam

54.00

337.20

391.20

Bihar

77.60

769.60

1,246.70

2,093.80

Chandigarh

75.00

Chhattisgarh 4

70.00

304.00

464.00

838.00

Delhi

95.00

109.40

738.20

10,374.00 11,316.60

Goa

30.00

220.00

Gujarat

304.10

2,013.20

4,138.90

33,181.00 39,637.20

Haryana

125.00

180.00

270.00

10,588.10 11,163.10

6,319.80

550.00

398.00

625.10

1,704.10

10 Jammu

and 3

250.00

Kashmir 11 Jharkhand

131.00

12 Karnataka

104

1,080.40 1,942.60

13,136.30

28,499.60 44,658.90

13 Kerala

338.70

1,235.00

20,501.50 22,281.50

14 Madhya

1,977.60 3,930.30

3,397.20

5,678.30

15 Maharashtra 78

742.30

2,988.40

2,433.70

39,427.60 45,592.00

16 Meghalaya

226.10

536.00

17 Orissa

235.10

211.00

1,473.00

11,430.60 13,349.70

18 Puducherry

419.00

2,947.80

3,366.80

19 Punjab

732.80

1,552.70

572.00

705.00

3,562.50

20 Rajasthan

633.90

783.80

1,100.80

12,508.80 15,027.30

21 Sikkim

175.60

558.00

2,669.00

13,708.00 17,110.60

22 Tamil Nadu 43

267.90

355.60

8,905.20

9,100.00

23 Uttar Pradesh 14

1,458.60

25,137.20 26,595.80

206.30

14,983.40

Pradesh

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762.10

18,628.60

23 24 Uttarakhand 2

43.00

478.00

521.00

25 West Bengal 30

638.00

965.70

1,714.40

3,299.10

6,617.10

26 Inter State

160.50

195.00

2,474.40

6,738.00

9,567.80

Total

758

9,471.90 19,826.90

55,307.50

298,725.8 383,332.1 0

Source: IJBMI According to the table above, there were 758 PPP projects in process in the country as the end of July 2011. Karnataka has the most PPP projects with 104, and the other top states being Andhra Pradesh with 96, Madhya Pradesh with 86, Maharashtra with 78, Gujarat with 63, Rajasthan with 59, and Tamil Nadu with 43. In general, India's southern states have undertaken more PPP projects than the rest of the country. Purely in terms of contract value Andhra Pradesh is among the leaders along with other states like Maharashtra, Karnataka and Gujarat. In spite of Madhya Pradesh having a good number of projects under their belt, their worth totally is happens to be lesser than the other states.

2.5 LEADING STATE IN PPP AND THEIR RANK Table 3 : Top leading states and their respective rankings Sr.

State

Total

No. % Number Rank

of projects of projects

No. 1

Karnataka

104

Value projects

of % in Total Rank Value

13.720

44,658.90 11.650

Andhra Pradesh 96

12.660

66,918.30 17.460

Madhya Pradesh 86

11.350

14,983.40 3.910

Maharashtra

10.290

45,592.00 11.890

Gujarat

8.310

39,637.20 10.340

Rajasthan

7.780

15,027.30 3.920

Tamil Nadu

5.670

18,628.60 4.860

Kerala

4.220

22,281.50 5.810

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24 9

Uttar Pradesh

1.850

26,595.80 6.940

Source: PPP in India

2.8 SCOPE From the above literature review there are a higher number of infrastructure-based PPP projects like highways, airports, bridges, ports, etc. in India. However, there has been a lack of service utility-based PPP projects like sewage disposal, electricity, water supply and there are opportunities waiting to be taken in terms of implementation of projects of such nature. Such a situation calls for an introspective approach that carefully examines the various models implemented in other developed countries, the reason for investment in service utility sector, their relevance to the Indian context, drawing out the various opportunities and matching those with the needs of India for revenue generation and fine tuning the implementation of these model as per the Indian context leading to successful implementation of PPP models of such nature.

2.9 CASE STUDIES 2.9.1 NH-34, KOLKATA AND PPP IN INDIA In the year 2014, the president of HCC Concessions, Arjun Dhawan was working on the largest road development project at that time. The Highway that stretched from eastern Indian port to the interiors of the West Bengal province, this project presents a prime example of benefits, drawbacks of PPP in the transportation sector. HCC Concessions finished the project despite delays and political drawbacks and is now receiving offers to purchase the equity of the project. This example calls for the having a swot analysis of the PPP project to better understand the different situations and scenarios that were present and in identifying the case and effects and testing the decision of going for PPP for this project. With the help of such a SWOT analysis, HCC Concessions can benefit by knowing their strengths and how they can capitalise on their them, know the weaknesses so there can be risk assessment, mitigation, or damage control, by knowing the various domains that are open or

NICMAR PGP ACM 34th BATCH 2020-22

25 will open and present themselves as opportunities and know the various threats that they must be wary of. Table 4 : SWOT analysis matrix for the NH-34 project

Strength

Opportunities

Threats

Strength Opportunities (SO)

Strength Threats (ST)

Using

HCC

Kolkata's HCC

Kolkata

has

two

strengths to solidify and options: capitalize on its enhance its market position.

strengths,

assess

market

trends, or pursue a twopronged market penetration strategy. Weakness

Weakness

Opportunities Weakness Threats (WT)

(WO) Instead A

focus

customer

building business

centric

emphasising

concepts,

HCC

product should concentrate on the

development and marketing strength and threats box or approach.

the

weakness

and

opportunity box. Source : Embapro

STRENGTHS: •

First mover advantage

•

Excellent product and quality of service

•

HCC's diverse product range

•

Strong financial statement and balance sheet

•

Intellectual property rights

•

High profit margins

•

Managing regulations and Business environment

WEAKNESSES:

NICMAR PGP ACM 34th BATCH 2020-22

26 •

Business model replicability

•

Customer dissatisfaction

•

Unsatisfactory track record on environmental consideration

•

Organisation Culture

•

Lacks critical talent.

OPPORTUNITIES: •

An increase in disposable income for consumers

•

Increasing Standardization

•

Increasing Market Size and Changing Consumer Preferences

•

Promising International Market Opportunities

•

Changing Technology Landscape

•

Business Models Based on E-Commerce and Social Media

THREATS: •

International Geo-Political Factors

•

Increasing bargaining power of buyers

•

US China Trade Relations

•

In the industry, there is a price-fixing culture.

•

Squeezing Middle Class in Developed and Developing World

•

As a result of environmental rules, the cost of operating in the developed market is increasing.

2.9.2 SOLID WASTE MANAGEMENT CASE STUDY ON JAIPUR CITY Table 5 : General information regarding the solid waste management of the city of Jaipur City

Jaipur, Rajasthan

Project

Only Waste Processing

Month/Year of Issue of RFQ

February 2005

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27 Month/Year of Project Award

June 2005

Bid process timeframe

Four and a half months

No. of Bids

21 firms submitted EOI, finally Three selected

Bid Variable/Winning offer

Highest Royalty of Rs 1.01 per ton of input MSW to JMC

Selected Private Operator

M/s Grasim Limited

Project Cost

Rs 15 Cr

Investment by Operator (% of project 100% by private party cost) Project Scope and Operator Obligations: Construction and development of an MSW processing plant at the prescribed location, as well as MSW segregation at the processing facility. ULB obligations: JMC should supply an aggregate quantity of MSW = 250 * D tones (Assured waste quantity), D = number of days in such month, to the processing facility at its risk and expense, with no fines. Make every effort to avoid supplying construction debris, biomedical waste, or hazardous waste (no penalty clause). Attempt to assist the concessionaire in obtaining project financing from the FIs. Key lessons: Failure to provide ensured MSW - due to worker dissent and other factors, the JMC has occasionally failed to provide the minimum agreed waste quantity to the processing facility. This should be accompanied by severe sanctions, or a private company should be in charge of secondary transportation. MSW quality concern – after informal players such as rag-pickers have collected the majority of the organic/recyclable waste, the JMC is distributing mixed un-segregated rubbish, dramatically lowering the waste's targeted calorific value.. Risk Allocation Summary

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28 Investment risk

Private party

Construction/development risk

Private party

Operating Risk

Private party Source : Swachh Bharat Urban

STATUS OF SWM IN JAIPUR CITY: In Jaipur city, it was discovered that there was a shortage of community waste collection facilities, and that the slump dwelling community dumped their garbage near their homes. The garbage cans in Jaipur were unclean and overflowing. Garbage was frequently thrown outside the bins. The main sewer system was also blocked as a result of sewer being dumped anywhere. So that there is need for government to come in action so they give contract to grasim’s limited, a private party, in which MSW was provided by government and waste process is done by private party. The main goal of this study was to look into Jaipur SWM in terms of how it is implemented, its successes and problems, and how those challenges are addressed, as well as the nature of public-private partnerships and how they have improved. From this study we find that formal sector carrying out their duty well but complain from citizens that their interaction with service provider. With the help of PPP it can be easily neglected. Still there are many areas for improvement are reduction of corruption, better trainee staff, more manpower, creating awareness to people and so on. With the help of such a SWOT analysis, Grasim limited Concessions can benefit by knowing their strengths and how they can capitalise on their them, know the weaknesses so there can be risk assessment, mitigation, or damage control, by knowing the various domains that are open or will open and present themselves as opportunities and know the various threats that they must be wary of.

STRENGTH: Limited odour and dust problem for settlement. Away from residential area.

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29 Near industrial area.

WEAKNESS: Too far disposal site. Visibility of MSW landfill from road. Order and dust problem for settlement due to the prevailing wind direction.

OPPORTUNITIES: No effects on visual quality. Reduce investment cost. No effects on surface water body. Recycling is possible.

THREATS: Negative effects on landscape. Threat on contaminated ground water of vicinity place. A potential threat for air with emitting order and harmful chemical gases.

2.9.3 TIMARPUR OKHLA INTEGRATED MUNICIPAL SOLID WASTE MANAGEMENT PROJECT, DELHI PROJECT DESCRIPTION MSW is generated in Delhi in the amount of 16,000 metric tonnes (MT). The current landfill sites used for garbage disposal have already reached their capacity, and the is no sign of improvement of the conditions. DMC has made attempts to reduce the quantity of sewer waste disposed in the landfill areas by using waste for electricity generation. Plants to convert MSW to Refuse Derived Fuel (RDF), a bio-methanation plant having potential of processing 100 TPD of green waste, and a water recovery facility capable of handling treated sewage are just a few of the facilities constructed as part of this project to solve the issue.

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PPP STRUCTURE OF THE PROJECT Initially BOOT model was used. Prior to the bid, the Timarpur-Okhla Waste Management Company Private Limited was established by IL&FS IDC and the Andhra Pradesh Technology Development & Promotion Board (TOWMCL). M/s Jindal Urban Infrastructure Limited was awarded the project in January 2008. (JUIL). From the six offers, the winner was picked. For the land at Okhla, the SPV signed a 25-year lease deal with the NDMC. The Delhi Development Authority had leased this land to the NDMC. For the provision of municipal garbage, the SPV entered into agreements with the MCD and the NDMC. It made a deal with the Delhi Jal Board (DJB) to receive sewage and dispose of treated effluent. BSES Rajdhani Power Limited signed a Power Purchase Agreement with the SPV.

FINANCING INFORMATION Because the power plant's capacity was increased from 16 to 20 MW, JUIL estimated the project's cost to be Rs. 200 crores, an increase of Rs. 25 crores above the DPR cost of Rs. 175 crores. JUIL was able to raise funds by combining stock and debt, with the loan coming from banks.

PROCESS ANALYSIS Table 6 : Project process analysis Inception

Delhi had problems with solid waste management and treatment, as well as a lack of electricity. MCD addressed the problem by launching a new project.

Feasibility

Technical

Technology that is both cost-effective and appropriate for Indian conditions.

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31 It is eco-friendly since it minimises carbon emissions.

Financial

Power sales and carbon credits are the two main revenue streams. The raw material is provided at no cost. Without any concessions or grants, it is viable to run the project profitably.

Procurement

Road shows are held to draw bids A discussion with renowned EPC contractors was held to emphasise the project's potential. The SPV acquired clearances from several government authorities. The project was awarded to JUIL based on the lowest tariff of the six proposals received.

Delivery

The SPV will generate 20 MW of electricity. An advance agreement for the selling of carbon credits has been reached - Over a ten-year period, it is estimated to yield 2.6 million CERs.

Exit

The concession period is 25 years. Parties to a concession agreement may mutually renew it after it expires. Source: PPP in India

KEY LEARNING AND OBSERVATIONS

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32 In general, MSW was not thought to be an industry that would attract private investment. At the time of inception, it was a one-of-a-kind effort in its field. The following are the most important takeaways from this project:

PROJECT PREPAREDNESS Observation Prior to the start of the bid procedure, there was a significant amount of preparation. Detailed studies of technical nature and related assessments, evaluations of financial nature, clarity in terms of the contract and evaluation of risk. In fact, the SPV that would carry out the project was formed before the bid opening. Learning To ensure project attractiveness and a quicker financial closing, good project planning is essential. The amount of uncertainty experienced by private investors is reduced when the contractual and regulatory framework is clear.

GOVERNMENT SUPPORT Observation Both the GoNCTD and the Principal Secretary supported the idea. Despite government help, the project took three years to get bid. The time it takes to persuade stakeholders, as well as obtaining licences and NOCs from various government bodies, is a crucial element. Learning To overcome these challenges, the government must establish a single clearing window or authority. This strategy will help close the gap between the project's expected and actual completion dates.

TECHNOLOGY Observation Because of the nature of Indian waste, the consortium picked RDF above other proven methods. The technology was well-suited to the conditions in India. Before being implemented in Delhi, the technology was tested in two distinct places. Learning When there is a choice of technology or approach for reaching the intended outcome,

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33 comparative study should be used to correctly assess the benefits and drawbacks of employing that method or technology.

CONSUMER EDUCATION Observations The project is near residential areas, leading in objections over its construction and pollution from rubbish burning. Public hearings were held to address these issues. The public hearings assisted to eliminate significant doubts about the project. Learning In order to realise the benefits of a new technology, consumers or end users must be educated. To gain buy-in for projects with various stakeholders, public hearings or stakeholder dialogues should be held.

CONVENIENCE Observation When more stakeholders are engaged, the project gets more challenging. The SPV had to secure permissions from a variety of government offices, evaluate other departments on progress, and attain financial close all at the same time for this project. Learning Having a single cleaning window is critical. to ensure that information and transactions move smoothly. Even if this is not possible, such formalities could be handled by a government institution. Instead of being weighed down in administrative procedures, the private organisation might concentrate on the essential development challenges.

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CHAPTER 3: COMPARATIVE ANALYSIS OF GLOBAL AND INDIAN SCENARIO OF PPP

3.1 INTRODUCTION Infrastructure bottlenecks are India's biggest problem in terms of economic development. Many nations have succeeded in constructing physical infrastructure through private involvement or the PPP model, but business engagement in our infrastructure development process has been unresponsive. Private telecommunications services are a success story in India, but despite many political and other sector-specific reform initiatives, PPP is a small percentage of total infrastructure construction. •

Insufficient procedural transparency

•

Inappropriate spread of risk

•

Inappropriate project evaluation

•

Over-cost and time

•

Overlapping regulatory independence

3.2 PPP FIGURES IN DIFFERENT COUNTRY Table 7: Country wise PPP statistics Region

Country

Active PPP Projects [under construction]

Active investment in PPP [ US $ M]

Southeast Asia

Malaysia

39,242

Europe

Russia

366

79,350

Latin America and Brazil

996

4,21,972

Caribbean

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35 Latin America and Mexico

319

87,961

2950

1105

2,60,126

Sub-Saharan Africa South Africa

114

27,349

East Asia

1829

2,35,658

Caribbean Middle

east Iraq

northern Africa South Asia

India

China

Source: World bank India's infrastructure has many shortcomings compared to its developed counterparts. From above table now we are, the Indian government is currently focusing more on partnerships with the private sector. August 2012 Indian Prime Minister Dr Manmohan Singh lifted the ban on transfers of state-owned land, relaxed land transfer policies, and eliminated the need for Cabinet approval for 3P projects to accelerate infrastructure construction.

3.2.1 ROAD 60% of Public private partnership projects involve road construction and account for 45% of 3P's monetary value. All these of the projects are part of the National Highway Development Project (NHDP). Examples of Public private partnership road construction projects of the Golden Quadrangle and North-South and East-West. About 14,000 kilometres (8,700 miles) of India's national roads are being converted into four-lane highways.

3.2.2 PORTS Port construction projects contribute 10% of the project and 30% of the public private partnership. As of 2011, India had 12 major ports and 185 smaller ports along its 7,517 km coastline. Ports built by the Public private partnership model increased India's cargo throughput by 10% by the year 2008 and 2011.

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3.2.3 MUNICIPAL WASTE Municipal Waste: Implementing Municipal Solid Waste Management (SWM) through Public Private Partnership in Indian cities will require an investment of $5 billion (approximately Rs 34,695) per years, according to a joint report by PG Sham Industry. chamber and British council. Multi-national Ernst & Young (EY).

3.2.4 SCHOOL MANAGEMENT Through PPP, the Department of Human Resource Development hopes to establish 2,500 model schools around the country. Gujarat, Punjab, and Rajasthan are among the states that have implemented a PPP framework, with Mumbai being the first municipality to do so.

3.2.5 FARMING SECTOR Recently, at Maan Ki baat, the Prime Minister said that the agricultural sector will also try the PPP model. Recently, India has increasingly faced public-private partnerships in the fields of education and agriculture.

3.2.6 GLOBAL PPP SCENARIO AND INDIA PPP is not new and has existed for centuries. In the 1617th century, in France, the concessionaire of toll road bridges in exchange for maintaining the route. However, PPP has become stronger in recent years as a form of financing, especially as an infrastructure initiative of great interest to the government.

3.3 GLOBAL PICTURE In the region, investment is demonstrating a variety of tendencies. At the document level, financing to three emerging markets in the Middle East and North Africa, South Asia, and SubSaharan Africa is growing. Telecommunications and transportation comprise the majority of growth in South Asia. For the third year in a row, financing in Latin America showed signs of improvement, but funding in East Asia remained steady at roughly $ 18 billion. However, funding stayed relatively below its highs in both of the regions that drove the surge in the late 1990s. From 2005 highs, funding in Europe and Central Asia has dropped by more than 30%. This is primarily owing to a scarcity of large-scale projects, such as those that concluded in

NICMAR PGP ACM 34th BATCH 2020-22

37 2005. In 2006, the number of stock exchanges in South Asia reached new highs. Surprisingly, that number has risen throughout Latin America since 2000, but it is still just 33% of its peak. The number of activities in East Asia, Europe, and Central Asia remained unchanged from 2005. Activity levels in the Middle East, North Africa, and Sub-Saharan Africa have dropped from 2005 highs. A diagram showing different countries in the world according to the stages of

sophistication in implementing the PPP model: Figure 3 : Market Development Curve Source : Deloitte, Closing the Infrastructure gap Between 1990 and 2006, the infrastructure project database tracked about 3,800 private-sector projects worth US$ 110 billion in developing countries' transportation, energy, telecommunications, and sewage sectors.

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38 Table 8 : Investment commitments to infrastructure projects with private participation in developing countries by sector or region, 1996–2006 (US$ millions) 1996 1997

1998

1999 2000 2001

2002 2003 2004 2005

2006

Energy

29.4

46.1

29.3

20.9

25.5

17.2

20.2

21.0

15.1

17.8

19.5

Electricity

26.8

42.8

23.3

18.1

23.3

13.8

11.1

16.9

11.9

15.4

15.9

Natural gas

2.6

3.3

6.7

2.9

2.2

3.7

9.0

4.1

3.3

2.4

3.6

Telecommuti

24.6

39.2

51.3

34.9

48.9

45.5

32.7

28.1

43.9

62.7

63.1

Transport

15.6

18.3

15.9

8.1

9.1

8.4

4.6

6.3

7.0

21.7

29.7

Airports

0.4

0.7

3.0

0.5

2.1

1.4

0.2

0.7

0.8

7.5

7.0

Railways

5.9

4.6

3.3

2.9

1.1

0.2

0.9

1.1

0.9

8.2

Seaports

7.5

9.7

8.1

2.2

3.8

4.7

2.2

2.7

3.5

6.3

10.1

Roads

1.8

3.3

1.5

2.4

2.0

1.3

2.0

1.6

7.0

4.3

Water and

1.3

10.2

2.3

6.5

8.6

2.3

1.6

1.5

4.7

1.7

2.0

36.6

10.1

12.2

18.0

12.6

11.4

17.8

13.4

17.6

18.5

10.7

14.6

11.9

9.8

25.8

14.2

17.3

12.1

17.2

35.8

23.4

25.6

48.3

68.9

38.0

38.5

33.3

19.3

15.4

17.4

20.6

27.9

Sector

ng cations

sewerage Region East Asia and 27.2 Pacific Europe and Central Asia Latin America and the

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39 Caribbean 0.1

5.1

3.4

2.9

4.1

4.4

1.6

1.9

7.4

7.1

11.0

South Asia

5.8

6.2

2.3

4.6

3.5

4.9

6.2

4.0

11.4

14.2

21.8

Sub-Saharan

1.4

3.0

2.2

2.9

2.2

4.0

3.3

5.6

3.9

8.7

11.8

70.9

113.7 98.8

70.4

92.0

73.3

59.1

56.8

70.7

103.9

114.3

Middle East and

North

Africa

Africa Total

Source: PPP Knowledge Lab According to a survey conducted by the International Bank for Reconstruction and Development, South Asia invests 15% of GDP in order to attain a 7.5 percent annual growth rate. The following is a breakdown by industry: Table 9 : Infrastructure investment needed to meet 7.5 percent annual economic growth in South Asia (% of GDP) Electricity Telephone

Paved

Rail

generation

roads

routes

lines

Improved Improved water

Total

sanitation

capacity New

1.8

0.7

2.0

0.1

0.3

0.4

5.4

0.7

0.4

0.5

0.1

0.3

2.2

2.5

1.1

2.5

0.2

0.6

0.7

7.6

investment Capital replacement Total

Source: World bank

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3.4 GLOBAL PRACTICES TOWARDS PPP IN INFRASTRUCTURE In early 1990s, provision for infrastructure around the world was a government monopoly and private sector involvement was very limited. In addition, globalization and the opening of markets through the Emerging Markets Economy (EME) have given private investors the opportunity to construct public infrastructure projects in collaboration with or without the government. According to the PPI database, approximately 3,841 infrastructure projects were financially completed between 1990-2006, most of them in Latin America and the Caribbean contribute 31.4%, East Asia and the Pacific contribute 28.6%, and Europe and Central Asia contribute 19.4%. Middle East and North Africa regions attracted a small share of private investment of 2.9%. Latin America and Caribbean countries were more focused on private projects in the mid-1990s, but the pattern has recently moved to East and South Asia as these countries are increasing investment opportunities in parallel with macroeconomic development changes during recent period.

9% 4%

40% 24%

Latin America & Carrebian Islands (436201 USD) East Asia and the Pacific Region (252998 USD)

Europe and Central23% Asia (206323 USD) Middle East and North Africa (52264 USD) South Asia (95888 USD)

Figure 4 : Share of Investment in Projects by Region and Total Investment Made from 19902006 Source : Author NICMAR PGP ACM 34th BATCH 2020-22

3.5 PPP INFRASTRUCTURE DEVELOPMENT IN INDIA Infrastructure projects were mostly constructed by the government prior to the country's economic reforms. In 1991, the Indian government unveiled a new industrial policy to enhance infrastructural sectors, emphasising private sector participation. Following is a list of initiatives announced in the yearly budget for PPP sector-specific infrastructure development. In the road sector, private sector participation is predominantly through the execution of existing PSUs, greenfield investment for the creation of new projects, and public-private partnerships under the BOT or BOOT model. As per guideline given by World Bank's PPI database, from 1990-2006, approximately 249 infrastructure projects were implemented and financially completed in India with participation of the private party. It accounts for 6.1% of all projects. Of the 6.1% of all projects in the other 150 countries, the largest investment in telecommunications accounted for about 49.6% of all investment in India, with 28.9% in the energy sector and 28.9% in the transportation sector between 1990 and 2006. This was followed by 21.3%. Among developing countries, India is the fourth largest project after China, Brazil and Russia, and the fifth largest private sector investment.

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Total Investment= $ 71 , 746 Million

ENERGY ( USD 20658) USD

TELECOM (USD 35466)

TRANSPORT ( WATER AND SEWAGE

Figure 5 : Sector Wise Share of Investment in Projects and Total Investment Made From 1990-2006 Source : Author

3.6 LESSON FOR INDIA It would be more realistic to calculate the amount of investment required to close the infrastructure gap and improve India's infrastructure after analysing the genuine degree of private engagement in India's infrastructure development. The impact of an infrastructure project is determined by the time of the investment, the quantity of the investment in relation to the existing infrastructure supply and demand mismatch, and the project's location. Taking into consideration national infrastructure gaps, demands differ from place to place and project to project, hence there is no precise estimate of the number of infrastructure development needed to reduce the country's deficit. Many emerging nations, such as China, have developed a large number of private-sector Greenfield power projects, while Argentina has mostly grown its power industry by selling and investing in Greenfield power projects. Brazil is known for not just attracting greenfield investments in the electricity sector, but also for creating PPP-based telecoms initiatives. Chile

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43 has effectively implemented a PPP model that includes institutional development, standardised risk sharing methods, and acceptable risk sharing mechanisms. The PPP model was used to create energy projects, roads, telecommunications, ports, and airports in many developing nations. These countries had monetary limitations, but perceived the expansion of public infrastructure with private participation as the total opposite. Choosing the correct PPP model, based on national experience, is dependent on concessions, stages of development, risk-sharing methods, government grants, political environment stability, and economic factors. As a result, it is widely acknowledged that the only way to create public infrastructure and bridge infrastructure bottlenecks is through proper private involvement in infrastructure development with appropriate risk sharing.

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CHAPTER 4: RESEARCH METHODOLOGY AND DATA ANALYSIS 4.1 RESEARCH METHODOLOGY The study was based on primary data obtained by a questionnaire survey carried out by relevant stakeholders. The survey was divided into three sections: a) Section A - Respondent's Information (Company name, company affiliation, experience level) b) Section B - Quantitative analysis via questions pertaining to Likert scale. c) Section C - Descriptive questions, multiple choice questions. Questionnaire Survey link : https://forms.gle/Ctcf6RpJQzQP3Gho7 •

The study

was based on primary data collected through questionnaire surveys and

interviews with stakeholders involved in the project. •

This research was also based on primary data obtained via interviews with field experts for practical and industry approved suggestions

•

Latest data was used to check the viability and effectiveness of various PPP initiatives via official websites.

•

71 survey responses were received and 2 interviews were carried out of relevant field experts.

•

Tools to be used for data analysis: i.

Google forms (For data collection)

ii.

SPSS (For data analysis)

The methodology adapted for the purpose of data analysis was Factor analysis. Factor analysis is a method for condensing many variables into a smaller number of factors. This method takes the largest common variance from all variables and converts it to a single score. We can use this score as an index of all variables for further investigation. Factor analysis is a subset of the general linear model (GLM), and it makes certain assumptions: there is a linear relationship, no multicollinearity, relevant variables are included in the analysis, and there is real correlation between variables and factors. There are other ways to choose from, but principal component analysis is the most popular.

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4.2 RESPONDENTS’ PROFILE

Figure 6 : Data collection Source : Author

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4.3 DATA ANALYSIS Factor analysis (Principal component analysis) was carried out with Varimax rotation. KMO and Bartlett’s Test was also carried out. Table 10 : KMO and Bartlett's Test KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

0.702 Approx. Square

Bartlett's Test of Sphericity

Chi-

68.940

df Sig.

28 0.000

Source: Author

There are various types of factor analysis, however for the purpose of this study, Principal component analysis was used. Principal component analysis is by far the most popular approach used by researchers. The first factor in principal component analysis is created by identifying the largest amount of variance. After that, it subtracts the variation described by the first two components and starts extracting the second factor's highest variance. The final component is the result of this technique. There are various types of rotation used for the purpose of factor analysis, however for the purpose of this study, varimax rotation has been used. Varimax rotation is a statistical approach for elucidating the relationship between components at the one-level level of factor analysis. Changing the coordinates of data collected by a principal component analysis is the typical method. The adjustment, or rotation, is designed to maximise the variance shared across the components. The shared variance is maximised, leading in conclusions that show how data connects with each core component in a more defined manner. A popular technique to maximise variety is to increase the squared correlation of items linked to one component while lowering the correlation on any other element. In other words, the varimax rotation makes item loadings easier by eliminating the middle ground and more accurately identifying the component that data loads on.

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47 Table 11 : Factor Analysis Component Operational Attributes

benefits

Implementational Feasibility/vi of Issues of service ability

service based based PPP

service based

PPP

Service based PPP are of prime importance

0.819

Service based PPP have operational benefits

0.729

Service based PPP solves funding issues

0.640

Service based PPP improves facilities

0.683

Service based PPP improves accountability

0.713

Service based PPP is viable option in current

0.639

Indian scenario Private players face issues like risk transfer, corruption,

damaging

public

services,

0.761

and

postponed payment while partnering with public players Implementation of service based PPP projects may

0.664

have challenges like poor risk-sharing, lack of business model, poor preparedness, and fiscal uncertainties Source: Author

4.3.1 FACTOR 1: OPERATIONAL BENEFITS OF SERVICE BASED PPP SERVICE BASED PPP HAVE OPERATIONAL BENEFITS: When the public sector need technical competence and the private sector requires project finance assistance, a public-private collaboration is a viable option, because of the benefits NICMAR PGP ACM 34th BATCH 2020-22

48 enjoyed by both parties. The public player at times might lack in terms of technical expertise which is covered by the private player scope of work and the private player will benefit from the funding aspect of the project. Post project completion the project may be transferred to the public player and the public player will benefit from operations aspects like tolls for highway projects.

SERVICE BASED PPP SOLVES FUNDING ISSUES: In terms of funding support will be extended to the public player for the efficient execution of the project in hand. Subsidiaries or grants, debts or investment in terms of equity may all be possible options for support that the private sector can provide to the public sector depending upon the nature of project, location, political factors, etc. These methods are useful when bankability is not possible independently form a project standpoint, financial viability is not certain or there are risks that the investors of private nature are not in a position to manage effectively. The various methods that funding is carried out by the public sector for a PPP project are : Direct support: By means of cash, land procurement, by providing assets, defraying construction costs, supporting major maintenance in order to compensate for bid costs. Waiving of fees, payments and other costs that would be paid to the public sector like tax liability waiver, tax holiday authorization. Providing loans to finance the project or investment of equity by means of viability gap funding.

SERVICE BASED PPP IMPROVES FACILITIES: Owing to the technical expertise brought in by the private sector the public sector is able to construct facilities of high quality, this results in the increase of quality and at the same time cost of construction can be compensated by the public sector leading efficient management of all aspects of the project management triangle leading to development of highly developed facilities.

SERVICE BASED PPP IMPROVES ACCOUNTABILITY: By adopting methods like proactive disclosure and providing open data via transparent publications of data and information can help in demystifying PPPs, so as to make certain the

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49 stakeholder that will be in charge for the respective project activities, making project information such as scope, progress within access to all respective stakeholders, this will lead to strong and sustainable practices. There has been development done by world bank in such aspects with the lunch of the tool OCDS PPP Extension which standardises the framework with respect to data and the resulting information which makes the stakeholders capable of publishing the information online via formats of open data.

4.3.2 FACTOR 2: IMPLEMENTATION ISSUES OF SERVICE BASED PPP Private players face issues like risk transfer, corruption, damaging public services, and postponed payment while partnering with public players: PPP projects also have a side of facing multiple risks from the point of view of different stakeholders be it feasibility or organisations risks,, conditional precedent risks, financing risks, construction risks, demand risks, operations and maintenance risks, revenue risks, terminations risks, residual value risks, however the transfer of these risks might lead to ambiguity and noncorporation from the respective stakeholders, which may indirectly result into damaging public properties, postponed payment and corruption. Implementation of service based PPP projects may have challenges like poor risk-sharing, lack of business model, poor preparedness, and fiscal uncertainties. Lack of preparation and foresight of the scope of work in hand might result in fiscal uncertainties that might result out of a lack of business modelling, poor preparedness and other non-desirable aspects.

4.3.3 FACTOR 3: FEASIBILITY /VIABILITY OF SERVICE BASED PPP SERVICE BASED PPP ARE OF PRIME IMPORTANCE Service based PPPs are an overlooked aspect and provide a lot of opportunities for best development of infrastructure in the service sector and collaboration with the public player would help in increasing the executability of such projects for well-developed public utilities for the neighbourhoods.

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SERVICE BASED PPP IS VIABLE OPTION IN CURRENT INDIAN SCENARIO With the increase in flooding, poor sanitation and sewage treatment, lack of sustainable processes to reuse grey water and many other sustainable aspects, the need for sustainability calls for the increase of well executed projects in the service based sector, the use of PPP models would solve the underlying issues of project delivery and would lead to betterment of the issues faced by countries like India. Table 12 : Total variance Total Variance Explained Component

Initial Eigenvalues

Extraction Sums of Squared Loadings

Total

of Cumulative %

Total

Variance Operational benefits of 2.353

Variance

29.410

2.353

29.410

15.388

44.798

1.231

15.388

13.864

58.663

1.109

13.864

service based PPP Implementational

Issues 1.231

of service based PPP Feasibility/viability

of 1.109

service based PPP Source: Author The above table shows a percentage variance for the extraction sums of squared loadings of 29.410% for the factor of ‘Operations benefits of service based PPP’, 15.388% for the factor of ‘Implementation issues of service based PPP’ and 13.864% for the factor of ‘Feasibility/viability service based PPP.’ Thus, the data is valid.

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RELIABILITY STATISTICS Table 13 : Reliability statistics Cronbach's

Number

Alpha

of Items

.801

Source: Author As a means of reliability statistics Cronbach’s alpha co-efficient of reliability was used. Cronbach's Alpha is a measure that is used to assess how closely the various components are associated as a group, and it is used to measure the scale's reliability. The alpha coefficient for the 8 factors is 0.801 suggesting the factors have relatively high internal consistency.

Figure 7 : Data collection Source : Author A Public-Private Partnership comprises numerous parties working together. These include capital, working capital, revenue, risk, responsibility, assets, and authority. The foundations of finance's risk/return relationship must be applied to revenue-sharing arrangements. Risks can be quantified on a financial, business, social, and administrative level. Returns must be commensurate to the risk taken on by the PPP partner. The vendor, the state government, and the corporation are all treated as independent entities under the revenue share model.The business models are made up of the flow of capital, constant and variable operating costs, and Fixed and variable payoffs are used to share revenue. As a result, a number of different business

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52 models have been presented. The graphic below depicts some of these. When it comes to capital values, fixed and variable costs, and revenue sharing through fixed and variable payoffs, the vendor is provided one of these models to select from. Figure 7 shows the maximum revenuegenerating PPP model based on the data obtained.

As per the data received by means of the survey the following suggestions are given by respondents regarding the viability of service based PPPs in India. •

Improved efficiency of operations

•

Through this concept we can resolve major issue like funding.

•

Sure, its will boost the current Developments Status.

•

For the Bigger projects it helps in risk sharing.

•

PPP must be considered with a long-term vision rather than it should only be looked after during the times of emergency. As per today's scenario Health care facility and environmental degradation is a major issue which needs to be rectified at an early stage. As a result, the PPP model should be presented, with the private sector being rewarded for completing projects on time and on budget. It aids in the introduction of private sector technology and innovation to improve public services through increased operational efficiency.

•

Yes service based PPP model only.

•

Government haven't that much expertise in the implementation of new projects.

•

In PPP there is a shared responsibility amongst the contractor and Govt. agency, resulting in better overall performance of the project, increased transparency and enforcement and monitoring.

•

They have more skilled manpower.

•

An instance where we have a private and NGO wing so that the collaborations with projects are more.

•

PPP is the best answer for many infra problems.

•

Financial aspects and sustainability.

•

It is very easy to execute the Project.

•

Public Finance cum private operations will improve delivery, asset monetization and help in Rejuvenation of urban utilities and infrastructure.

•

More efficient.

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53 •

More accountability leads to completion on time …. No cost escalation.

•

Transparency in administration and project completion can only be obtained via PPP mode, however, the Public sector/department has to co-operate and work as per the needs and demands of the scenario.

•

PPP incorporates more professionalism and expertise in any type of urban or rural project.

•

Accountability and Investment shared.

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CHAPTER 5: CONCLUSION Public-private partnerships (PPPs) have proved to be a feasible, workable and reliable option for the development of various facilities for India. The public sectors involvement in infrastructure projects was always present but the involvement of the private sector gives the added advantage of technical expertise to the operational expertise of the public sector. The current situation of the Indian public-private partnership (PPP) landscape is encouraging. However, the development of PPP models has been fraught with difficulties and hurdles. Regulation and capital availability for the private sector are also major issues. For its part, the Indian government recognises the potential benefits of such cooperation for our country and is striving to overcome some of these difficulties. The goal of this study is to get a greater understanding of the scope of such relationships, their potential future extension, and the hazards they may bring to our country. When it comes to service-based projects, the idea of PPP models has caught on, as seen in the above case studies in Jaipur and Delhi, and also due to social conditions that demand the inclusion of solid waste management in the urban fabric, as well as political factors that add to the additional layer of support in the form of collaborative efforts with campaigns such as 'Swach Bharat Abhyaan,' there has been an initiation of ideas and a good number of opportunities. The objective of the study was to study the viability of service based PPP project in India and our methodology involved, initially understand how to concept of PPPs have functioned on a national and global level and understanding the various nuances in place for PPP projects, further a couple of case studies were looked into in India where service based PPP projects have been implemented, moving ahead a survey and interview was carried out and to get expert options from industry experts, with reference to these responses and opinions the data was analysed and factors were shortlisted and the respective conclusions were drawn. The initial literature review gave us insights about the involvement of PPPs in various sector, however research points to the direction of a lack of development of service based PPP projects, this unexplored sector with respect to the partnership of the public and private parties, led to further studies about the involvement of the public private components in PPP projects through case studies. For the purpose of case studies, some case studies we carried out to know the various methods in which service based PPP projects are carried out within the geographical limits of the country on India, to get an idea of how service based PPP projects fare in India.Our findings suggest that, solid waste is intrinsically related to urbanisation and economic growth NICMAR PGP ACM 34th BATCH 2020-22

55 because as nations urbanise and their living standards rise, so does their consumption of goods and services, resulting in greater waste. Globally, almost 1.3 billion tonnes of municipal solid waste are created each year, with this number anticipated to quadruple by 2050. Public health and the environment can be affected by poor waste management, as well as higher expenses for governments than if the garbage was properly managed in the first place. Both the public and commercial sectors must take greater responsibility for waste creation and disposal, particularly in terms of product design and waste separation. Formalizing these obligations through well-structured public-private partnerships (PPPs) can lead to considerable gains in solid waste management efficiency and quality. Governments must evaluate the substance and amount of the current waste stream, acceptable technology, the need of strict participation as a community and standards should be high with respect to the environment, who will pay for what, and the availability of competent commercial partners in order to be successful. As such partnerships become more common, investments in the solid service based industry have increased as governments seek private cash and technical knowledge for waste project building, operation, and management. Waste incineration, waste treatment, recycling, and energy from waste (EFW) projects are the most popular types of programmes. To ensure project attractiveness and a speedier financial conclusion, good project planning is required. The degree of uncertainty faced by private investors is reduced when the contractual and regulatory environment is clear. The government must establish a single clearing window or authority to handle questions about licences and NOCs. This approach will aid in bridging the gap between the project's anticipated and actual completion deadlines. When there is a choice of technology or approach for reaching the intended outcome, comparative study should be used to correctly assess the benefits and drawbacks of employing that method or technology. Consumers or end users must be educated in order to reap the benefits of new technology. Public hearings or stakeholder dialogues should be undertaken to garner buy-in for initiatives from diverse stakeholders. To guarantee that information and transactions flow smoothly, a single clearing window is essential. Even if this is not practicable, government institutions might manage such processes.

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56 Instead of getting bogged down by administrative procedures, the private sector might focus on the most pressing development issues. In a nutshell, with reference to the survey, case studies and study of different PPP models it can be said that if the financial and legal aspects are taken care of service based PPP projects can be successfully implemented. This proves that there is a possibility for PPP in service based industry.

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