Public Private Partnership (PPP) - Group D

8/8/2019 Public Private Partnership (PPP) - Group D

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Public Private Partnerships in

India


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Why PPP?


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China v/s India

China India

GDP US$ 5.02 Trillion US$ 1.3 Trillion

GDP Growth Rate 9% 7%

Infrastructure

Ports 27 major sea ports 11 major sea ports

irports 147 airports(43 international)

Plans: 244 airports in 2020

92 airports(12 international)

Highways Expressways: 65,000 kmHighways: 3.73 mn km

Density: 39 km/100 sq km

Expressways: 200 kmHighways: 70,548 km

Density: 2 km/100 sq km

Urban areas / cities 160 cities with population > 1million

43 cities with population > 1million


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Infrastructure gap in the country was holding

back economic growth by 1.5 2% every year

- Planning Commission


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As per the 11th Five Year Plan

Investments in Infrastructure:

Investment by Centre: ` 7,656 billion

Investment by States: ` 6,709 billion

Balance Investment: ` 6,196 billion

From Private Sector

Including Public Private Partnerships


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What is PPP?


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Public Private Partnership

Government and a private corporation combine toprovide a public service through the creation and use ofnew assets for a set time period

Private sector consortium forms a special company calleda Special Purpose Vehicle (SPV) to develop, build,maintain and operate the asset for the contracted period

Goal: To combine the best capabilities of the public andprivate sectors for mutual benefit.

Result: Integration and cross-transfer of public andprivate sector skills, knowledge and expertise


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Risk Allocation

Public Shared Private

Land Acquisition

Connectivity

Permissions &Authorisations

Regulatory Risks

Political Risk

Change in Laws

[Financial Support]

Volume Risk

Inflation Risk

Force Majeure

Design

Construction

CommissioningOperating Performance

Project Finance

Technology obsolescence


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PPP Variants

Management

Contracts

LeaseContracts

ConcessionContracts

Service

Contracts

Outsourcing

AffermageEnhanced Affermage

BOT, BTO, BOO,

BOOT, DBO, LDOT,

BDO etc..

States Risk

Investors RiskTechnical

Assistance

FullDivesture


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PPP Variants

Build/Operate/Transfer (BOT) or Build/Transfer/Operate (BTO)

Build-Own-Operate (BOO)

Build-Own-Operate-Transfer (BOOT)

Buy-Build-Operate (BBO) Design-Build (DB)

Design-Build-Maintain (DBM)

Design-Build-Operate (DBO)

Developer Finance

Lease/Develop/Operate (LDO) or Build/Develop/Operate (BDO)


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PPPs Imply

Efficiency gains

Efficient use of resources

Availability of modern technology

Better project design...... Leading to

Faster implementation

reduced life cycle costs and

optimal risk allocation.


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Advantages of PPP

Frees limited Public Finances for other priorities

Helps remove key economic bottlenecks

Improved service delivery and efficiency

Enables access to private sector resources, technology, andmanagerial skills

Access to long-term financing

Shifts risk to the private sector


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Government incentives for PPP

Regulatory clearances by Government

100% FDI allowed through automatic route

100% tax exemption on income for certain years

Allowing developers to charge user fees / tariffs

Government Subsidies (VGF)

Cheaper loans

Allow commercial exploitation to generate revenue


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Public Private Partnerships in India

Sector #Projects

Value(In

Crores)

Roads 271 102,005

UrbanDevelopment 73 15,288

Ports 43 66,499

Tourism 29 2,467

Energy 24 17,110

Airports 5 19,111

Railways 4 1,601

Education 1 93

450 projects

2,25,000 crores
http://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=MAHARASHTRAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=MADHYA%20PRADESHhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=ORISSAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=WEST%20BENGALhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=MAHARASHTRAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=ANDHRA%20PRADESHhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=MAHARASHTRAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=MAHARASHTRAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=TAMILNADUhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=TAMILNADUhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=KARNATAKAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=KARNATAKAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=WEST%20BENGALhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=WEST%20BENGALhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=UTTAR%20PRADESHhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=UTTAR%20PRADESHhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=ANDHRA%20PRADESHhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=ANDHRA%20PRADESHhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=ORISSAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=ORISSAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=RAJASTHANhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=RAJASTHANhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=GUJARAThttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=GUJURAThttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=JHARKHANDhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=JHARKHANDhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=DELHIhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=DELHIhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=MADHYA%20PRADESHhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=MADHYA%20PRADESHhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=BIHARhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=BIHARhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=GOAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=GOAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=MANIPURhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=MANIPURhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=KERALAhttp://www.cry.org/mainapp/cryuserapps/projectsearch.aspx?state=KERALA


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Some examples of PPP


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Urban Development Initiatives


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Mumbai MetroRail Project

Versova-Andheri-Ghatkopar

Charkop-Bandra-Mankhurd

Colaba-Mahim-Bandra

Charkop - Dahisar

Ghatkopar Mulund

BKC-Kanjur Marg via Airport

Andheri (E) Dahisar (E)

Hutatma Chowk - Ghatkopar

Sewri Prabhadevi

Total Length: 146.5 km

9 Corridors to be implemented in 3 Phases

Total Cost ` 47,092 Cr (US $10 bn)

Metro Master Plan was prepared withthe help of DMRC, IIT Mumbai and TCS

in the year 2003

Phase

I

Phase

II

Pha

seI

II


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Corridor 1: Versova Andheri Ghatkopar

First PPP in BOOT framework

Awarded to JV between Reliance Energy Limited,

Veolia Transport, France and

MMRDA

JV called: Mumbai Metro One Pvt Ltd

Designed to carry about 6 lakhs commuters per day initially

Will reduce travel time from Versova to Ghatkopar from existing 90 minutes to about 21minutes

World class features, facilities and quality standards

Highest levels of safety


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Corridor 1: Versova Andheri Ghatkopar

Consessioning Authority : MMRDA

Fixed Concession period : 35 years

Viability Gap : Bidding Criteria

12 elevated stations

Project Cost: ` 2356 Cr ($ 501 M)

Likely to be completed by March 2011

Viability Gap Fund of` 650 crores being provided by thegovernment


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Other Similar Projects for UrbanDevelopment

Other projects undertaken in India under PPP

Delhi Metro Rail Corridor (DMRC)

Mumbai Metro: Balance 8 corridors

Bandra Worli Sea Link etc


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Airports inIndia

Mumbai Airport

Delhi Airport

Bangalore Airport

Ahmedabad Airport

Mumbai Airport


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Hyderabad InternationalAirport Limited (HIAL)

Greenfield Project Type of PPP: BOOT

Concession period: 30 years

Project period: 2005 - 2008 Project cost: ` 2,478 crores

Investment pattern:


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Mumbai InternationalAirport Limited (MIAL)

Brownfield Project Type of PPP: LDOT

Concession period: 30 years

Project period: 2004 - 2010 Estd. Project cost: ` 5,800 crores

Investment pattern:


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Going Forward

Development of 25 non-metro airports (Ahmedabad,Amritsar, Agatti, Aurangabad, Agartala, Agra, Baroda, Bhopal, Bhubaneshwar, Chandigarh, Coimbatore,

Dehradun, Dimapur, Guwahati, Jaipur, Jammu, Khajuraho, Nagpur, Patna, Portblair, Pune, Rajkot, Ranchi,

Raipur, Goa, Imphal, Indore, Lucknow, Madurai, Mangalore, Trichy, Trivandrum, Udaipur, Visakhapatnam

and Varanasi)

Particulars Airport Indicative Cost

` crores

Restructuring/ Modernization forworld class airports

Delhi & Mumbai

Chennai & Kolkatta

15,000

5,000

Green Field Airports Bangalore, Hyderabad, Goa, Pune, NaviMumbai, Nagpur (Hub) and Greater Noida

10,000

Upgradation 25 selected airports 7,000

Modernization/ Improvement 55 airports 3,000

Greenfield Airports in north east 454

Total investment 40,454


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PPP for Highways


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Mumbai Pune Expressway

Greenfield project Length of expressway: 95 km Type of PPP: BOT (30 years) GoM appointed MSRDC Project Cost: ` 1,630 crores

Land acquisition: 1,030 Ha Contractors appointed:

IJM / SCL Joint Venture Hindustan Construction Co. Mumbai Larsen and Toubro Ltd. Mumbai V.M. Jog Engineering Ltd. Pune

Konkan Railway Corporation Ltd Operation & Maintenance:

Ideal Road Builders (IRB)

MSRDC exploring options for commercial utilisation ofland


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NHDP Plan

The main components ofNHDP include:

Golden Quadrilateral (GQ)

Length :- 5,846 kmConnecting Delhi, Kolkata,Chennai and Mumbai

North-South & East-WestCorridors

Length :-7 ,300 kmKashmir to Kanyakumari -4000km (with a spur to Cochin) andSilchar to Porbandar- 3300 km
http://www.nhai.org/nh2.asphttp://www.nhai.org/nh5.asphttp://www.nhai.org/nh4.asphttp://www.nhai.org/nh8.asphttp://www.nhai.org/nh8.asphttp://www.nhai.org/nh4.asphttp://www.nhai.org/nh5.asphttp://www.nhai.org/nh2.asp


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Ports


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Mundra Port

Greenfield port Project cost: ` 2,151 crores

Commenced operations in 1999

Private partner: Gujarat Adani Port Ltd. (GAPL)


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Issues in PPPs

Slow decision making

Selection Criteria Revenue share

Tariff Regulation

Post selection alteration in scope of business

PPPs must be thoroughly cultivated and managed interms of planning, monitoring, and acceptance of lossof some control


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Thank You

Documents

Public Private Partnership (PPP) - Group D