Government has been actively engaged finding the appropriate policy framework, which would give the private sector adequate confidence in investing into infrastructure projects and at the same time, have adequate checks and balances through transparency, regulation and competition. Consequently, Public Private Partnerships (PPPs) are being actively encouraged for execution, operation and maintenance of infrastructure projects in India. Over the lifespan of these projects the legislative, political, social, market and economic environment could all change significantly.
This is especially the case in developing countries, where the social, political and economic conditions are unstable. Thus a high degree of risk and uncertainty surround PPPs and it is critical that adequate identification, assessment, and evaluation of these risks take place. These risks have a high degree of impact on the feasibility of the project, which is a key parameter in the successful implementation of the project. The concession agreement plays a very important role in PPP. The concession agreement provides a regulatory framework of how the PPP should be implemented.
The Developer should be given the autonomy in handling and executing the projects. In this regard, it is imperative that the operation and maintenance performance criteria be fixed. The project risks need to be identified up-front. The risks should be distributed among stakeholders with mitigation mechanism. The applicable income tax benefits should be made automatic or built into the concession agreement Infrastructure Coordination Committee should be constituted in order to clear projects at national level The States should also float Special Purpose Vehicles (SPVs) to attract strategic investors for commercially viable projects.
There should be a clear dispute resolving mechanism in order to resolve any disputes arising between the Government and the promoters There is need for a stronger institutional mechanism in the areas if policy, regulation, operation and Maintenance in order to promote private projects in the entire sub sectors of Infrastructure. • Any approach to determining capital outlay for the PPPs should endeavour to balance the conflicting objectives of allowing market driven resource allocation, ensuring objective bid evaluation combined with reasonable scope for timely remedial action to cure any failure on part of the concessionaire. • An integrated approach for addressing the regulatory framework of PPPs is required as the regulatory framework is interlinked with the issue of regulated monopolies. The approach 61 finally adopted must take into account the degree of maturity the industry