The department of Economic Affairs has a database of different contracts which are used for construction of roads, hospitals, urban-development projects and so on. There are many forms of contracts that government organizations make with private companies to complete long term projects. For instance if there is a twenty year project, government would hire one private firm for first five years, for initializing, and then it could change to a new firm and make a new contract for next five years. And so on as per its stages’ requisites. The PPP is operationalized through a contractual relationship between a public body (the conceding authority) and a private company (the concessionaire). This partnership could take many contractual forms, which progressively vary with increasing risk, responsibility, and financing for the private sector.These contracts are usually financed by user fees or tariffs or government subsidies. The public sponsor of the PPP decides the degree of private participation required for the particular project. This decision is usually based on the government’s objectives of undertaking the project, the degree of control it desires, and the ability of the PPP consortium to deliver the required service. It is also influenced by the provisions of the existing legal and regulatory framework, the structuring of the project to attract private resources, and the potential to generate future cash flows
PPP-Private Public Partnership contract can be made when capital is owned by government and maintenance and services are to be provided by a private company which works on profit mode. After the completion of the infrastructure or of a major project government, within a designated time, government retains ownership and the private company which had made it has to hand the project back to government. The contract should have a clause that would make monitoring mandatory and that if there is any faulty execution, it would lead to cancellation of the contract. For instance inferior quality cement is used to make bridges, so while its under construction itself its quality should be monitored. After handing over, we cannot retrace the steps to correct the inadequacies. There should be a clause saying that "if materials are faulty, penalty will be charged or project will be cancelled." In implementation of technology (whether it would work or not) the associated uncertainties are faced by the private firms making success affirmative. With risks the private parties will work hard to make sure that the project would succeed; for if government makes it, construction would get delayed. E-tendering procedure must be adopted. Standardized bidding procedure and a standardized format in agreement and implementation in dealing with PPPs should be adopted, so that there is transparency, and selection should not be based on personal considerations. There should be a policy and regulatory provisions in procurement procedures too. Monopolies should be discouraged. Renegotiating should be done transparently –by redoing process of e-tendering. Supply side constraints must be noted, what are the possibilities of something going wrong? Initializing of contract must be done by bid proposals instead of signing MOU (Memorandum of Understanding) to start with. This will assure transparency when dealing with private partnerships. The process of obtaining approval can lead to omitting of transparency in the upcoming stages of making of deals. The approvals should be fast tracked to avert nontransparent deals: where is the project getting delayed, and why? Files should be tracked in public domain. Selection by nomination should be avoided due to lack of transparency in it.
As development is envisaged, growth of one sector is always made at the cost of loss to another. This trend has to be checked in implementation of policies. To provide resources for some, some one else’s rights are relinquished, for example in the issue of land acquisition. In eagerness to offer concessions, government tries to please the private firm and in the process overrides the interest of the common citizen. Other elements can be written into the contract, but welfare of citizen is unwritten and therefore promptly forgotten. In addressing the issue of land rights--certain stakeholder percentage could be given to the land owners who sold their land for making of the infrastructure. If a farmers land has to be acquired, he could lease his land for long period like for 50 years. In making deals, the private firm makes its profit, government facilitates by making land acquisitions and policies for its growth, then who looks out for the interests of the common citizen? Project outcome as citizen’s requirements should be central instead of maximization of interests of private and government partners.
Transparency and Accountability can be written into Partnership contracts by the process of e-tendering and e-procurement. Already over 750 projects have been commissioned to various private companies in PPP contracts after approvals from various government organizations. Planning Commission is to make provision for setting up 1,500 e-clusters across the country in public private partnership (PPP) model under the twelfth Five Year Plan (2012-17).For fast industrialization effective policies in making well-defined Partnership contracts are most needed today. To protect the needs of citizens and to maintain the nation’s wealth should be central goal in making regulatory policies in constructing of contracts. New strategies for speedy industrial growth and development have to be regulated, defined after analyzing different possibilities in partnership contracts. Which one will benefit whom? What effect will this have and on whom?
Delays in timelines-start to finish may affect in a profound way as there is steep rise in making-cost (cement steel, bricks etc.). The rise would come quickly which my affect the execution of the projects. The planned cost would be lower than the actual cost, causing a deficit. Who will bear the difference? Not the government which has signed the contract on how much it is going to invest. Not the private company which operates on profit mode. The average citizen is the one who is going to pay for the infrastructure that government had asked for; that the private firm had constructed. The delays would mean high costs borne by the final users of these costly roads and the occupants of the homes developed by PPPs. There should be a forum for the listening to the side of the actual users of these roads, homes, schools and hospitals who will supposedly benefit from these PPP projects. Many result in impoverishment of the people instead of benefiting them; costlier bus tickets, higher toll tax, costlier flats, very high school fees, costlier medical care etc.As development is envisaged, growth of one sector is always made at the cost of loss to another. This trend has to be checked in implementation of policies. To provide resources for some, some one else’s rights are relinquished, for example in the issue of land acquisition. In eagerness to offer concessions, government tries to please the private firm and in the process overrides the interest of the common citizen. Other elements can be written into the contract, but welfare of citizen is unwritten and therefore promptly forgotten. In addressing the issue of land rights--certain stakeholder percentage could be given to the land owners who sold their land for making of the infrastructure. If a farmers land has to be acquired, he could lease his land for long period like for 50 years. In making deals, the private firm makes its profit, government facilitates by making land acquisitions and policies for its growth, then who looks out for the interests of the common citizen? Project outcome as citizen’s requirements should be central instead of maximization of interests of private and government partners.
Transparency and Accountability can be written into Partnership contracts by the process of e-tendering and e-procurement. Already over 750 projects have been commissioned to various private companies in PPP contracts after approvals from various government organizations. Planning Commission is to make provision for setting up 1,500 e-clusters across the country in public private partnership (PPP) model under the twelfth Five Year Plan (2012-17).For fast industrialization effective policies in making well-defined Partnership contracts are most needed today. To protect the needs of citizens and to maintain the nation’s wealth should be central goal in making regulatory policies in constructing of contracts. New strategies for speedy industrial growth and development have to be regulated, defined after analyzing different possibilities in partnership contracts. Which one will benefit whom? What effect will this have and on whom?
Delays in timelines-start to finish may affect in a profound way as there is steep rise in making-cost (cement steel, bricks etc.). The rise would come quickly which my affect the execution of the projects. The planned cost would be lower than the actual cost, causing a deficit. Who will bear the difference? Not the government which has signed the contract on how much it is going to invest. Not the private company which operates on profit mode. The average citizen is the one who is going to pay for the infrastructure that government had asked for; that the private firm had constructed. The delays would mean high costs borne by the final users of these costly roads and the occupants of the homes developed by PPPs. There should be a forum for the listening to the side of the actual users of these roads, homes, schools and hospitals who will supposedly benefit from these PPP projects. Many result in impoverishment of the people instead of benefiting them; costlier bus tickets, higher toll tax, costlier flats, very high school fees, costlier medical care etc.As development is envisaged, growth of one sector is always made at the cost of loss to another. This trend has to be checked in implementation of policies. To provide resources for some, some one else’s rights are relinquished, for example in the issue of land acquisition. In eagerness to offer concessions, government tries to please the private firm and in the process overrides the interest of the common citizen. Other elements can be written into the contract, but welfare of citizen is unwritten and therefore promptly forgotten. In addressing the issue of land rights--certain stakeholder percentage could be given to the land owners who sold their land for making of the infrastructure. If a farmers land has to be acquired, he could lease his land for long period like for 50 years. In making deals, the private firm makes its profit, government facilitates by making land acquisitions and policies for its growth, then who looks out for the interests of the common citizen? Project outcome as citizen’s requirements should be central instead of maximization of interests of private and government partners.
In making of any contract or deal the welfare of the citizen is not considered as he is not represented there. If a worker has to travel to a long distance on a highway owned by an infrastructure-making firm and charged an exorbitant road tax, he would have to hand over his whole pay for transport. The worker would be further impoverished and pushed below the poverty line even when he works very hard in his job. Rules of PPP may work-out well in developed countries but not work-out under conditions prevalent here. Impoverishment of the worker may make it difficult for him to earn a living, forcing him to resort to crime for survival. Once crimes are on rise, we cannot retrace our steps to make cheap transport for the common worker to survive. The people’s plight has to be seen and not just feasibility of government and profitability of the private firms in the making of PPP policy. The long term goal should be in mind while making plans. Thus there is third component in the partnership deals, and that is its effect on the average citizen.
Streamlining of processes in the making of partnerships is most important, delays should be avoided. State-level initiatives in making the PPPs should be encouraged. The state government would be is aware of the need of the infrastructure. States should be capable of executing these projects; states should give a feedback on their capacity-building needs and requirements for assistance from the central government to overcome delays. For example if a state government is not able plan for a project that is urgently needed, it can ask for central government’s expert advice/assistance; if it needs finance for a dam between two states, it can ask central government for help. This must be done fast by emails for averting delays. By streamlining of the processes involved in the stages of execution (for example getting approvals) through counter checks and constant feedback, the partnerships can be result in big success. For instance, Ministry of Environment and Forests has to approve before commencement of a project. This should be fast tracked and delays averted. Files ahould be visible in public domain. Files could be moved faster with increased computerization in office procedures. Gap between moving from one ministry to another should be reduced. Streamlining of statutory clearances is an absolute necessity and it should be done faster (computerization) so that the construction of infrastructure is not delayed.
In making of projects, private investments can be encouraged. Success can come if it is private led investment instead of government led. Since private firms work on fixed time framework, and make sure risks are averted and that profits are made, they will be a sure success. Project finance which depends on government policy is like a road-block as most bureaucrats do not understand that projects have to make profit. We need a sound policy in protecting public interest while making infrastructures. These points, if inculcated, will result in faster industrialization, and therefore lead to alleviation of poverty. This will serve to create a more just and equal society in India which is our goal.
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