Public Private Partnership in

Infrastructure Development

Ravi Mital
Adviser (Infrastructure)
Planning Commission
Government of India
 Background

• High Growth Rate

• India’s spending on infrastructure about 5% of GDP as

compared to 10-12% of East Asian countries

• Need large investments $ 515 billion over 11th Plan.

• Public Sector resources not sufficient

• Private investment necessary for infrastructure

development

• PPP – preferred mode for attracting private investment

 Infrastructure Deficit
• Highways
– 66,590 Km of NH (2% of network, 40% of traffic): only 12% Four-
lane; 50% Two-lane; and 38% Single-lane
• Ports
– Inadequate berths, rail / road connectivity and draft are
constraints
• Airports
– Inadequate capacity: Runways, aircraft handling capacity,
parking space & terminal buildings
• Railways
– Old technology; saturated routes: slow average speeds (freight:
22 kmph; passengers: 50 kmph); low payload to Tare ratio (2.5)

• Power
– 13.8% peaking deficit and 9.6% energy shortage; 40% T&D
losses; absence of competition; and inadequate private
investment
 PPPs in India

• Supplement scarce public resources.

• Investment largely limited to PPP in physical
infrastructure sector (roads, ports, power, airports, metro,
urban sector).
• Few PPPs in social sector (education, health, water
supply).

• Mixed success stories.

• Positive climate.
 Snapshot of PPPs in India
Sector Number Amount
(US $ billion)
Roads 198 9.25
Ports 54 8.46
Airports 8 5.87
Railways 3 0.20
Power 35 4.10
Urban Infrastructure 69 7.88
Others 26 0.44
All Sectors 393 36.20
 Projected Investment in Infrastructure
(2007-2012)

Sectors Total Private Percentage

(US Sector's of Private
$ billion) Share (US Sector
$ billion) Share
Electricity 166.63 40.63 24.38
Roads and Bridges 78.54 28.13 35.82
Telecommunication 64.61 44.42 68.75
Railways 65.45 12.62 19.27
Irrigation 64.34 0.00 0.00
Water Supply and Sanitation 35.93 1.36 3.77
Ports 22 13.62 61.91
Airports 7.74 5.29 68.34
Storage 5.59 2.80 50.04
Gas 4.21 1.63 38.76
Total 515.05 150.49 29.22
 Airports
• High growth in traffic: about 20% per annum
• Likely investments by 2012: $ 8 bn
– PPP in Bangalore, Hyderabad, Delhi & Mumbai in
progress
– 10 Greenfield airports & 35 other airports to be
developed
• Model Concession Agreement finalised
• Transparent tariff setting: Airport Economic Regulatory
Authority being set up
• AAI to be restructured
 Railways

• SPV for Dedicated Freight Corridor set up

– Likely investment US $ 10 bn
– JICA feasibility study has been completed
• Competition in container train movement introduced: 15
concession agreements signed
• Electric/Diesel Locomotive factory under PPP
• PPP envisaged in new routes, railway stations, logistics
parks, cargo aggregation & warehousing etc.
 Highways

• 46,000 km to be developed by 2012: $ 59 bn

• PPP programmes approved so far: 21,036 km

– 6-laning of 6,500 km of GQ & Other NH
– EW & NS Corridors: 4-laning of 6,736 km
– 4-laning of 6,800 km in selected sections on BOT
– 1,000 km of new expressways
 Ports
• New berths to add capacity of 830 MT by 2012
• Capital dredging for deepening of draft
• Estimated investment: $ 22 bn, including state sector
ports
• Model Concession Agreement finalised
• Perspective plan for 20 years and Action Plan for 7 yrs
on way
• Rail Road connectivity projects in progress
• Enhanced powers delegated to Port Trusts
• Simplification of Customs procedures in progress
 Governance Structure for PPPs
• Constitution of a Committee on Infrastructure (CoI).
– Prime Minister is the Chairperson.
– Ministers of Infrastructure Ministries; Finance Minister
and Deputy Chairman, Planning Commission are
members.
• Empowered Sub-Committee of CoI chaired by Dy.
Chairman, Planning Commission and represented by
Ministries.
• Secretariat for CoI in the Planning Commission.
• Ministries retain their role but work closely with CoI to
develop & implement vision for world-class infrastructure.
• Greater reliance on inter-ministerial & inter-disciplinary
dialogue to enrich outcomes & eliminate conflicts of
interest.
 Instruments of Governance
• PPP Appraisal Committee
– Appraises & recommends all PPP projects of the
Central Government.
– Approves proposals for Viability Gap funding.
– Chaired by the Finance Secretary.
– Appraisal Unit in the Planning Commission.

• India Infrastructure Finance Company (IIFCL)

– Raises funds against sovereign guarantees.
– Provides upto 20% of capital costs as long-term debt.

• PPP Cells
– Created in Central Government Ministries/State
Governments
– Coordinate, develop and implement PPP projects
 Financial Support to PPPs

• Scheme for Financial Support: Leverage scarce budgetary

resources for addressing critical gaps in private sector
financing.
• Viability Gap Funding upto 20% of capital costs, another
20% by sponsoring Ministries/State.
• Roads, ports, airports, railways, tourism infrastructure and
urban transport.
• Indian Infrastructure Finance Co. Ltd.: SPV to provide long term
debt to viable infrastructure projects.
– Direct lending to PPP and public sector projects.
– Refinance for private projects.
 Standard Documentation

• Model Concession Agreements in highways, rail & ports

• Guidelines for Pre-Qualification of Bidders (RFQ)

• Guidelines for Invitation of Financial Bids (RFP)

• Guidelines for formulation, appraisal & approval of PPP

Projects

• Guidelines for financial support to PPP projects

• Manual of Specifications and Standards for highways

 Steps taken to strengthen ex-post
management of PPP projects
• Policy paper on regulatory authorities under
consideration.
• Capacity building at various levels
• Scheme of transaction advisers to help in project
formulation and management
• Improving Communications
• Strengthen dispute resolution mechanism
• Contingency plans
THANK YOU