Public private partnership

for new planned settlement

Case area of Housing

Nistha Nakarmi
29.10.2021
Contents
1 . I N T RO D U C T I O N
Background. Introduction. Problem statement. Objective

2 . M E T H O D O LO GY
Ontology. Epistemology. Methodology. Methods

3 . L I T E R AT U R E R E V I E W
PPP. PPP in housing sector. Model of PPP

4.PPP in HOUSING
Landpooling. Squatter resettlement

5 . P U B L I C S E C TO R I N H O U S I N G
Ichangu Housing complex

6 . P R I VAT E S E C TO R I N H O U S I N G
Real estate housing development process

7.DISCUSSION
Planning. Flow chart. Structure. Execution.

8 . CO N C LU S I O N A N D R E CO M M E N DAT I O N
Conclusion and recommendation
Introduction
Background. Introduction. Problem
statement. Objective
A planned human settlement is a settlement
which is planned and controlled by government.
It includes road facilities, drainage, open space,
mass management patterns, and so forth.
- R Aditantri et al 2019

Public-Private Partnership (PPP) as a

cooperation of one or more public actors and
one or more private actors, to realize a
mutually agreed upon goal in an organizational
structure that provides the means, accepts the
risks and shares revenues.
- (Bult-Spiering, 2003)

While in matter of execution of (PPP), project

cultures play a central role in influencing
successful cooperation between partners
- (Marrewijk, 2008)
Urban growing population, the urban sprawl is evident in the cities of
Nepal. The sprawl is the result of accommodating growing population and
weak planning laws.

In order to balance the urban development and create livable cities, new
towns (40) have been proposed by MoUD where DUDBC have been
preparing plans and programs. However, the plans and programs are in
nascent stage where execution, especially in terms of housing, is not dealt
with in-depth strategy and formulation.

Government has not been able to effectively manage the sprawl up until
now, while private sector has been able to take the market demand running
successful real estate housing business

(MOUD, 2017) advocates for Public Private Partnership (PPP) in housing

supply for economically weak strata.

The country has numerous successful PPP projects in terms of infrastructure

project like roads, waste treatment, waste management, hydropower, etc
while, in terms of housing supply, there exist very few examples, that too in
small scale which questions the sustainability of such projects.
Objective

Main objective:
- To analyze public private partnership and its model
for new settlement planning and development.

Sub Objective:

- To understand models of PPP implemented in

housing sector at national level.
- To explore models of PPP for new settlement
development.
METHODOLOGY
Background. Introduction. Problem
statement. Objective
ONTOLOGY Public private partnership (PPP) when effectively
worked on, has the potential to get the pros of each
sector and present the best solution for the problem of
urban planning especially, housing sector, through
collaboration

EPISTEMOLOGY The epistemological reasoning is based on literature

review and case study.

METHODOLOGY Research is based in inductive logic falling under

interpretivism paradigm. The methodology used is case
study and methods used are literature review and
interviews.
LITERATURE REVIEW
PPP. PPP in housing sector. Model of PPP
 (Zhang, 2011) expresses the principal reason for adopting a PPP
model for the provision of housing and urban development is that,
where project suitability is correctly measured and implemented, this
approach can offer greater value for money when compared with
traditional procurement

Pros of PPPs as: Challenges of PPP as

cost savings,
whole of life cycle,
output-based contracts,
risk sharing,
deliverance on time,
enhancement of public management
improved service level
increased level of funds for
infrastructure.
not being able to absorb unlimited
risk,
entails a loss of public sector
management control,
higher cost of finance for private
sector,
long-term and relatively inflexible,
enhanced capacity and capability
from both private sector and public
sector.
 Model Description
Design-Build Private sector designs and build infrastructure to meet public sector
performance specification, often for a fixed price, so the risk of cost
over run is transferred to private sector.

Finance Only A private entity, usually a financial service industry, funds a project
directly or uses various mechanism such as long- term lease or bond
issues.

MODELS OF PPP Operation and A private operator, under contract, operates a publicly-owned asset
Maintenance Contract for a specified term, while ownership of the asset remains with the
public entity.

Build-Finance The private sector constructs an asset and finances the capital cost
only during the construction period.

Design- Build- Finance- The private sector designs, builds and finances an asset and provides
Operate hard facility management or maintenance services under a long-term
agreement

Design- Build- Finance- The private sector finances, builds and finances an asset, provides hard
Maintain- Operate and soft facility management services as well as operates under a long-
term agreement.

Design-Own- Operate The private sector finances, builds, owns and operates a facility or
Source: (Adhikari, 2019), service. The public constraints are states in the original agreement and
(Council for PPP, Canada, n.d.) throughout on-going regulatory authority

Concession A private sector concessionaire undertakes investments and operates

the facility for a fixed period of time after which the ownerships revert
back to the public sector.
 Model Description
Revenue PPPs Revenue-based PPPs are PPPs where
the private party receives revenues
solely from the direct collection of
user charges. Revenue-based PPPs
are expected to be applied in
sectors where direct and clear user
charges can be applied and
collected, such as transport and
MODELS OF PPP similar infrastructure and services.
Availability PPPs Availability-based PPPs are PPPs
where the private party receives
revenues from payments from the
public partner or other government
body. Availability-based PPPs are
expected to be applied in sectors
where direct user charges are either
impossible or undesirable (social
sectors like health or education) or
where the government itself is
effectively the user (such as
accommodation projects for
government buildings, etc.).
Hybrid PPPs Hybrid PPPs are PPPs where the
Source: NPC, 2011 private party receives revenues
through some combination of user
charges and availability payments,
and/or may obtain revenues by
exploiting other assets or right
While in terms of level of cooperation, PPP models are categorized
as
•PPP outsourcing model (Low level of cooperation)
•PPP Contract model (Medium degree of participation)
•Strategic PPP cooperation model (High degree of participation)
- (Dreyer & Girmscheid, 2006)
PPP IN HOUSING
Landpooling. Squatter resettlement
Land pooling
▪ (Neupane, 2020) claims the land pooling projects in Nepal have
characteristics of public private partnership project as it is the
government of Nepal's efforts in providing urban land and
infrastructure in partnership with landowners through land pooling.

▪ And based on PPP model categorization, it falls under strategic PPP

cooperation model

Cashflow in landpooling projects (Neupane, 2020)

(Shrestha B. , 2010) advocates such project since, the development costs
are not only lower than other types of land development but are also
shared by all the landowners and further, claims land-pooling projects in
the valley are gaining popularity and are the residents’ preferred model.

(Neupane, 2020) explains the project comprises representative of

landowners, project officials and government officials which lacks the
consortium of professional developers, who are financially capable to fund
the project.

This highlights the need of professional developer in the picture, which

have capacity to upgrade the project in terms of quality as well as
quantity.
Resettlement Project: Sambriddha Awas Kirtipur

▪ the construction of 44 units in Kirtipur with the objective of relocating the

informal settlements along the Bishnumati corridor that were displaced due to
the Bishnumati link road construction.
▪ The relocation project was a successful approach and demonstrate the public
private partnership model which falls under the category of strategic PPP
cooperation model
 Lumanti KMC Nepal Mahila Ekta Nepal Basobas Basti
Samaj Samrakshan Samaj

2004: through this fund the

Urban Community first housing project for the
Support Fund (UCSF) urban poor has been
launched

Kirtipur Site selection Considering affordability

Design Selected by beneficiaries

Land: Subsidized by fund

Build Infrastructure: Helped by
Water Aid housing
Kirtipur Housing department and UN
Management Committee Habitat.

Operation and Ownership From UCSF to recipient

Maintenance transference after loan clearance
Public sector in Housing
Ichangu Housing complex
Resettlement Project: Ichangu housing complex
▪ The government initiatives in housing have only been through the land
development programs like site and services, Guided Land Development
and land pooling (MOUD, 2016).
▪ In terms of affordable housing, government project of Janata Awas for
resettlement purpose can be seen.
The river side squatter settlement along Bagmati river was demolished in 2012
leaving nearly1000 people homeless. The act was condemned by rights bodies
and civil society organization.
As a result of which Ichangu Narayan Housing project of squatters and urban
poor was started (Gurung & Ojha, 2019).
The action without thorough planning has led to loss as the project despite its
construction, still remain vacant.
▪ This showcases ineffective planning and execution of public sector.

▪ But the main issue lies in supply of housing for increasing population. The
National Shelter Policy, 2012 has projected that around 1,364,000
residential housing units are required in urban areas with around 900,000
new constructions by 2023 to fulfill the demand for homes in the country.

▪ While new towns have been proposed by MoUD where DUDBC have been
preparing plans and programs, but past project in housing sector clarifies
inexperience of government
Private sector in Housing
Real estate development process
According to the Nepal Land and Housing Developers’ Association (NLHDA), out of the
total demand of homes, 2.26 percent is being fulfilled by housing developers while units
constructed by the private land owners is 97.74 percent. But, construction of houses on plot
in unplanned area is what results in sprawl leading to difficulty in accessing infrastructure
and services. This is the reason why gated community of housing are attracting buyers.
Based on interview with key players in real estate development, the real estate
development steps identified are as below.
▪ Real estate is a booming business, so, developer makes sure about the effective
planning with infrastructure and proper unit design and construction.
▪ Developer not only construct the project but also manages the property until the
complete handover is done to the newly formed society.
▪ The pricing of the property is depended on the location, project plan, built up
area and amenities provided.

“it is difficult to convince developers to lose some saleable area for better space
planning however, a design with proper justification to add value can result in better
sales”.
-Swarup Gurung (Principle architect Arniko Designers and Planners)

This indicates the intent of developers to optimizes the saleable area with less
interest in social amenities.

▪ However, the price of houses in gated community is sky rocketing. As per

interview with Sales Manager of CG Properties, the average house price in
Kathmandu Valley, as of year 2021, is 30 million Nrs- 37 Million Nrs for average
plot size of 127 sqm of built up 176 sqm to 232 sqm.

▪ While private sector has its strength in finance, construction management and
property management, it sure has taken a toll in affordability.
DISCUSSION
SNo CASE STUDY KEY FINDINGS

1. LAND POOLING PROJECTS Preferred model for land

development
the need of professional
developer highlighted

2. Resettlement Project: Sambriddha Awas Kirtipur successful approach and

demonstrate the public
private partnership model
category of strategic PPP
cooperation model

3. Resettlement Project: Ichangu housing complex ineffective planning and

execution of public sector
4. Private sector in Housing private sector has its
strength in finance,
construction management
and property management.
Affordability is an issue
PPP basic framework for new settlement
planning and development

1.Planning
Feasibility analysis committee team
Multidisciplinary
team of experts and
Planning stakeholders

2.Settlement Execution management

development project
(SPV)

Development 3.Developer
4.Developer/
Settlement
development project Delivery/ Operate/
(SPV) Maintain
 1. PLANNING COMMITTEE
Holistic planning for sustainable settlement (Socially inclusive, environmentally
responsive and economically vibrant)

PLANNING COMMITTEE Multidisciplinary team of PLANNING

TEAM experts and stakeholders COMMITTEE TEAM

▪ PPP experts Project concept

development
▪ Sustainable development experts
▪ Environment/ ecological experts
Feasibility analysis Land Acquisition for
▪ Urban planners
project
▪ Urban designers
▪ Energy experts Detail project planning
Land provision
▪ Economic experts
Lease provision
▪ Social experts Project activity
Contract period for
▪ Construction sector experts flowchart
development
▪ Real estate development experts Offtake responsibility
▪ Real estate management experts Project structuring Performance risk
▪ Infrastructure development experts
▪ Infrastructure development experts
▪ Legal experts
▪ Government
 2. SETTLEMENT DEVELOPMENT PROJECT

Execution management

Public sector Settlement Private sector

Development Project

Development/
Developer Construction
management
Commercially viable
housing

Housing development Infrastructure

development

Social Housing/
Affordable housing
SPV/ Developer
Based on contract Social Infrastructure Physical Infrastructure

Manage

Sales Transfer Rent Operate Maintain

3. COST BENIFIT

LAND COST Cost of land acquisition

PLANNING COST Planning committee, consultancy

charges.

Construction cost, Material

DEVELOPMENT COST
Procurement

Operation cost, maintenance cost,

MANGEMENT COST
marketing cost

REAL ESTATE SALES Revenue from sales of units

REAL ESTATE RENTS Revenue from rental stream

Revenue collected through

OPERATION CHARGE
operation of services

VIABLE GAP FUND Fund through central government

(VGF) for PPP
Conclusion
Conclusion and Recommendation
Conclusion

- To understand models of PPP implement in housing sector in national context.

- To explore models of PPP in new settlement development.

▪ The successful private public partnership project in housing sector has

demonstrated strategic PPP cooperation model as effective
approach.
▪ While analyzing strength and weakness of both private and public
sector in housing, it points out the opportunity for effective PPP.
▪ The case study demonstrated the need to upscale the PPP for
housing and urban development and need of professional
developer.
▪ The case study expressed a concern of affordability of housing
▪ The conceptual framework developed, demonstrated a way of
attaining affordable housing and social infrastructure. ( Benefit
obtained through PPP and VGF)
Recommendation

- PPP, as a way to attain large scale development, but require in depth

exploration in urban development and planning field
- Effective model of PPP needs exploration based on context.
(Ministry of Housing and Urban Affairs, Government of India, 2017,
developed 6 different model of government land based and 2 different
model of private land based context to address need for affordable housing
projects through PPP
- Capacity building for PPP implementation through workshop, training,
exchange and sectoral capacity building
- Establishment of Project development fund and Viable Gap fund
- Mainstream PPP in provincial to local level
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