CENTRE OF EXCELLENCE FOR GOVERNANCE, ETHICS AND

TRANSPARENCY (CEGET)Promoting pragmatic approaches around UNGC Principle 10 and SDG 11

GLOBAL COMPACT NETWORK INDIA (GCNI)

About Us:• The United Nations Global Compact (UNGC) is the largest voluntary corporate citizenship

initiative in the world offering a unique platform to engage companies in responsible businessbehaviour through the Ten Principles focusing on human rights, labour standards, theenvironment and anti-corruption. Global Compact Network India (GCN) Indiahttp://globalcompact.in/ formed in 2000 and registered as non-profit society in November 2003functions as the Indian Local Network of the UNGC. By incorporating the Global Compactprinciples into strategies, policies and procedures, and establishing a culture of integrity, GCNIencourages companies to uphold their basic responsibilities to people and planet. At present, theIndia network ranks among the top 3, out of the 102 local networks in the world.

GCNI established the Centre of Excellence for Governance, Ethics and Transparency (CEGET)(http://ceget.in/) in 2015, with the overall objective of developing a premier knowledge repositorythat conducts innovative action research and training, provides a platform for dialogue andcommunication and facilitates systematic policy initiatives for strengthening transparency andethics in business. The goal of CEGET is to bring in diverse stakeholders on a common platform todeliberate upon challenges, exchange best practices, and make policy recommendations to promoteresponsible business standards, across various sectors. CEGET has aligned its mandate around SDG11 and committed to the agenda of Urban transformation.

Encompassing SDG 11 in India: Key Commitments

Some major activities of CEGET in SDG 11 and Smart City initiatives:

Framework for Governance of Smart Cities

• Developed 10 Pillar Framework of Governance of Smart Cities

• The framework was piloted and implemented in Pune Smart City over 12 months

• U.N. University (Portugal) intends to convert the Framework into a training module

Public Private Partnerships (PPP)

• Developed PPP frameworks for Infrastructure and IT sector

• Developed an accounting model for Grantor-Concessionaire entities

• Promoted PPP guidelines and tools in the Smart City project implementation (Pune)

Risk Assessment

• Conducted Risk Assessment studies with focus on Infrastructure sector

• Developed toolkits for assessing and mitigating risks of doing business in India – for businesses as well as government

• Held Focused Group Discussions (FGDs) with stakeholders in Tamil Nadu and Karnataka

Compliance and Smart Governance

Developed IT-enabled comprehensive compliance management solution for smart city with support from a KP

The tool ensures statutory compliances to all laws applicable to the Special Purpose Vehicles (SPVs)

Framework for Governance of Smart Cities: The 10 pillars

Establish definition of Smart City with all Services, Solutions and

Products

Develop Smart City Components, Master Plan and Roll out plan

Align with Existing Guidelines and Best Practices

Define and develop sustainable Business/Financial Models/Clarity

on funding options and plans

Define and Establish Decision making structures, Responsibility

matrix and Accountability with SPV framework

Enable and Ensure extensive industry participation in smart

cities with clear deliverables and milestones

Establish clear monitoring and evaluation system - Framework and

parameters against timelines and deliverables

Build Capacity of the SPV Officials and Use Project Management

Consultant for support

Encourage participation and innovation by local industry/Encourage entrepreneurship

Establish Procurement policies and guidelines, Define Procurement

Process and Effective compliance models

POC: Various Elements and Facets

• This Proof of Concept has emerged from a grounded process of ten months and its pilottesting for another twelve months.

• Every pillar of the Governance framework of the Smart Cities is expounded into fourheads – Key Elements, Performance Indicators, Targeted Outcomes and Challenges.

• This framework will benefit city, state and central governments as well as businessesparticipating in Smart Cities projects. This framework will ensure governance andtransparency at every stage of smart city projects which in turn encourage more nationaland international businesses to invest and bid for projects.

• The Governance Framework will eventually benefit - Citizens, Government Entities andBusiness Stakeholders and instill a feeling of inclusiveness, transparency and aninvolvement in the Decision – making process.

• A meticulous plan has been set in a definitive timeline to accomplish the implementationof POC. POC will be monitored and evaluated every quarter & appropriate decision willbe taken for course correction and to overcome various challenges.

POC: Recommendations and Prospects

• Smart city projects involve large investment and procurement is a major part of it.Government should create policy for procurement of goods and services.

• Development for policy framework for private investment in urban sector

• Data sharing between smart cities so best practices and concepts can be adopted

• Institutions for capacity building and attracting new talent

• Cities should develop or look for best practices and frameworks for smart citydevelopment from around the world.

• Citizens participation should increase incrementally in every stage of the project

• Ease of doing business in country to encourage international companies to bid forprojects and invest in smart cities

• Cities should partner with universities, nonprofit groups and private sector whiledeveloping Smart City initiatives.

• PPP is an arrangement between Govt. entity & Private entity for provisionof Public Asset or Public Service, where there is a predetermined allocationof Risk between Public entity & Private entity

• Small-scale infrastructure projects developed on public-private partnership(PPP) can expedite development of smart cities.

• Cities have limited resources and must engage the private sector to meetinfrastructure and service needs.

• The private sector not only generates wealth and jobs, but also innovatesand improves public delivery systems.

• We cannot build world-class cities with public funds alone. PPPs facilitateeconomic growth on a scale and timeline that would be impossible withoutprivate capital.

Designed to comprehensively demystify the key aspects of PPP projects in Infrastructure sector

PPP Framework for Infrastructure Sector

• Under the Smart Cities Mission of GoI, infrastructure has been one of the major thrust areas in all the major cities

• National and international Case studies about PPP Projects from various sectors also examined

• Deliberates on the various stages of PPP projects including procurement process and implementation.

Developed to address the implementation of PPP Projects in the Infrastructure Sector (with major IT component)PPP Framework for IT Sector

• Recently, several strategic e-Governance initiatives of the GoI and the State Govts being executed in PPP with IT industry

• IT component has become integral to large number of projects and so a separate RFP is published for same

• It provides a more transparent and balanced business environment to avoid any roadblocks

Defines and streamlines the process of effective implementation of Accounting Framework for Concessionaire & Grantor

PPP Accounting framework for Grantor - Concessionaire

• PPP projects are awarded by Govt Authority (Grantor) to various private companies (Concessionaire)

• In absence of any accounting standard of PPPs in India, it becomes imperative to have an Accounting Framework

• Expounds the rights and liabilities and services to be provided by Grantor - Concessionaire

Public – Private Partnerships: The sine qua non for Smart Cities’ projects

Various Phases of the PPP Framework:

Phase 1

Project Identification

Phase 2

Full Feasibility Study and PPP Due Diligence

Phase 3

Procurement, Final Approval

and Award

Phase 4

Contract Management

and Monitoring

Exit Strategy

Key Learnings and Observations from Case Studies:Bangkok Skytrain:-

1. Quality of Market Assessment (Ridership forecast): Ridership forecast is the key input inrevenue setting & is directly linked to revenue against which cost & return are set off.

2. Stakeholders Support: For project like this which was of large magnitude, it is important forgovernment agency to garner adequate public support to ensure smooth implementation.

3. Financial instability: International & national financial stability gives project financial stability inlong run (Asian financial crisis hit in 1997)

4. Approvals from multiple entities: Existence of multiple authorities led to delays, decisionreversal & increase in cost in implementation. Single window clearance is advisable.

5. Interconnectivity issues between different projects: There was no interconnectivity betweenBTS & underground transit system and also different tickets for both systems. So, cars wereused. Also, malls were not connected.

6. PPP Laws and Regulations: Inadequate, overlapping and ambiguous laws and regulations.

Case Studies (Contd.)

Delhi – Gurgaon Expressway:-

1. Land Acquisition process: In thickly populated areas, apart from difficulty in acquisition, thereis a risk of not providing the land within reasonable time impacting the overall schedule of theproject.

2. Approval from multiple agencies: More than 15 govt. bodies were involved in the project.Grants and approvals become a time - consuming and cumbersome process.

3. Support from Stakeholders: Public support for land acquisition and road expansion activitiesshould be ensured through a continuous dialogue with the affected individuals, especially whentwo or more states are involved.

4. Outdated Traffic forecast: Traffic studies conducted almost a decade before. Unexpected highnumber of vehicles led to heavy queues at toll booth and delays in traversing stretches.

5. Judicial impediments: There were no risk mitigation measures incase the revenue fromprojects stops due to court orders.

COMPLETE PROCESS ORGANOGRAM

Strategic Planning Finalizing Strategic Planning

Project1. Preliminary Need Assessment 1. Pre – Feasibility Analysis

Identification 2. Identifying Project which will meet service need 2. PPP Suitability Check3. Expression of Project Need 3. Suitability Criteria & Drivers Value4. Assigning PPP Process management team 4. PPP family decision tree

Financial Study Technical & Risk Study Market Feasibility

1. Financial Feasibility 1. Technical Feasibility 1. Market Analysis & Project ScopeFeasibility Study

& PPP Due2. Value for Money 2. Social Feasibility 2. Need Analysis

3. Economic Feasibility 3. Environmental Feasibility 3. Option Analysis Diligence2. Risk studies3. Redefined PPP Mode

Pre – Procurement Activities

Procurement,1. Land acquisition & Right of way

Final Approval & 2. Shifting of Utilities, Approvals & ClearanceAward 3. Choosing best suitable Procurement method

4. Design of procurement process5. Preparing for procurement

Procurement Process

1. Procurement Process2. Expression of Interest (EOI)3. Request for Proposal (RFP) 4. Selection of Preferred bidder

Risk, Rare Events & Finance Monitoring Activities Contract Management Activities

1. Risk Management 1. Performance Monitoring & Review 1. Development Stage2. Handling Rare events 2. Regular reporting mechanism 2. Construction Stage3. Other important activities 3. Escalation mechanism 3. O & M Stage4. Financial Closure 3. Managing Issues & disputes 4. Exit Stage

Contract

Management&

Monitoring

Exit Strategy Steps Exit Strategy Process

1. Phasing out over time1. Steps for Phasing down & Handover

Exit Strategy 2. Alternate Strategy to Phasing Down2. Transfer of responsibility 3. Documentation3. Phasing Out 4. Clauses to Exit services

5. Clauses for Service Transfer Agreement

Other PPP

Project related

activities

1. Environmental Impact Assessment 2. Social Impact Assessment 3. Contract Management Plan template 4. Performance Monitoring 5. Key Performance Indicators 6. Handling rare events (Contingencies)

Risk Assessment Framework: Infrastructure Sector

Transport

Energy

Water and Sanitation

Communication

Social and Commercial Infrastructure

Risk Assessment Studies: Mapping the Risks

Focus upon the risk of doing business in infrastructure in India and measures tomitigate and overcome risks. The study is to be conducted in the following areas:

Market Entry Risks

•The Political Environment

•EODB / Land Acquisition

•Market Condition

•Collaborative Partnering Risks

Operational Risks

•Pre-operative Risks

•Procurement & Vendor Related Risks

• Internal fraud

•Construction Phase Risks

•Technological Risks

•Labour Risks

Financial Risks

•Market Risk

•Credit Risk

•Liquidity Risk

• Inflationary Risk

Strategic Risk

•Social & Environmental Risks

•Compliance Risks

•Strategic Forecast Risks

• Innovation Risks

• Intellectual Property Risks

Mitigating Risks

•Suggest/formulate various practices, policies, audit mechanisms

•Address all the 4 risk areas

• Increase awareness of key risks

• Improving accountability and transparency

Risk Assessment Study: The Toolkits

Toolkit 1:

Type : Interactive

Purpose: To assist new and existing businesses in assessing and mitigating risks for an effectivedecision making at a “BUSINESS LEVEL”.

Proposed Outcome: To help businesses in making a decision towards initiating/continuing businessin India in the infrastructure sector

Target Audience: Business Stakeholders

Toolkit 2:

Type : Interactive

Purpose: To assist Policy-makers in assessing and mitigating risks for an effective decision making ata “POLICY MAKING LEVEL”.

Proposed Outcome: To help policy makers in taking effective decisions while executinginfrastructure projects in India.

Target Audience: Policy Makers/Govt stakeholders.

Buy-in from Government and Businesses

• GCNI – CEGET signed a five year MoU with Pune Smart City Development Corporation (July 2016 – June 2021) to provide advisory in governance practices

• The Ministry of Housing and Urban Affairs (MoHUA) is referring to the PPP and Risk Framework of GCNI – CEGET for developing their advisory

• Through the creation of a level playing field in Pune the number and quality of businesses interested in and bidding for Pune smart city projects has substantially increased

• Pune city has requested to sign an MoU on making it a sustainable an resilient city

THANK YOU

Shabnam SiddiquiDirector

Centre of Excellence for Governance, Ethics and Transparency

UN Global Compact Network India

Scope Minar, Core 3, 5th Floor; Laxmi Nagar; Delhi – 110092.

Mob: +91.95999.57997

Ph No: +91-11-22406496

Email: gcnicoe@gmail.com Website : www.ceget.in