Public- Private Partnership

PUBLIC- PRIVATE PARTNERSHIP Presentation By: Prof. Madhu Bharti 26th November 07

PUBLIC – PRIVATE PARTNERSHIP

The concept of a PPP (Public Private Partnership) has been adopted by various governments in recent years. Instead of the public-sector procuring a capital asset and providing a public service, the private sector create the asset through a single stand alone business (financed and operated by the private sector) and then deliver a service to the public sector client, in return for payment linked to the service levels provided.

AREAS OF PUBLIC PRIVATE PARTNERSHIP

(a) Infrastructur e Developmen t (b) Development of Facilities

(d) Housing & Urban Development

(c) Transportation

Public private partnerships in infrastructure and service provision can take various forms such as  BOT

- Build Operate Transfer

 BOOT- Build Own Operate Transfer  BOLT - Build Own Lease Transfer, etc.,

BOT (Build Operate Transfer)

BOT (Build Operate Transfer) BOT is a relatively new approach to infrastructure development, which enables direct private sector investment in large-scale infrastructure projects. The private partner builds a facility to the specifications agreed to by the public agency, operates the facility for a specified time period under a contract or franchise agreement with the agency, and then transfers the facility to the agency at the end of the specified period of time.

Parties to BOT Projects: Government Agency Sponsor Construction Contractor Operation and Maintenance Contractor Financiers Other Parties

Advantages of BOT Projects • The government gets the benefit of the private sector to mobilize finances and to use the best management skills in the construction, operation and maintenance of the project. • The private participation also ensures efficiency and quality by using the best equipment. •

The

projects

competitive

are

bidding

conducted situation

in

and

completed at the lowest possible cost.

a

fully

are

thus

BOT PROJECTS IN INDIA NHDP:

ROADS

National Highways Development Programme (NHDP), consisting the golden quadrilateral and the north-south,eastwest corridors has been launched. NHDP is being implemented by National Highways Authority of India (NHAI). NHDP is the India’s largest ever highway project. It involves four and six laning of 13,146 Km of roads with a total cost of Rs.54,000 crores. BYPASS ROAD AT COIMBATORE: Bypass road(28km) at Coimbatore, is the first private road project executed on BOT basis in Tamilnadu. This project was constructed by L&T, with a contract period of 32 years(from 1998). It also include the construction of an additional 2-lane bridge(22 yrs from 2000) across river Noyaal at Athupalam.

MSRDC: City Integrated Road Development Projects in Aurangabad, Solapur and Nagpur. Widening of Thane Ghodbunder Road SH – 42. Mumbai to Pune Express Highway Project was given to MSRDC in march 1997 with permission to collect toll for 30 years.

As many as 46 road projects in the country, worth almost Rs.70 billion, have been contracted on BOT basis, 17 of which are being developed under the National Highways

RAILWAYS Konkan Railway corporation was supposed to construct the line from Roha

to

Thokur

and

operate it for 10 years. This was the first railway project to be executed on NARMADA INFRASTRUCTURE BOT basis. LIMITED (NICEL):

NICEL

is

CONSTRUCTION formed

by

L&T

ENTERPRISE for

design,

construction, maintenance and operation of the second Narmada bridge(4 yrs) at Zadeshwar on NH-8 in Gujarat. It is a 1.4km-long bridge adjacent to the first bridge, along with 4.6km of approach roads. KARUR BRIDGE: It was constructed on BOT basis by East Coast Constructions and

BOOT (Build Own Operate Transfer)

BOOT (Build Own Operate Transfer)

A BOOT is a concession contract, the government entity selects a private company (or consortium) to develop, finance, build, own, and operate a power project for a designated period of time, after which time the ownership of the project is transferred compensation.

to

the

government

without

Stages of a BOOT Project OPERATE: BUILD:  Design  Manage project implementation

 Manage and operate facility  Carry out maintenance

 Carry out procurement

 Deliver products/service

 Finance

 Receive payment for product/service

 Construct OWN:  Hold interest under concession

TRANSFER:  Hand over project in operating condition at end of concession

Advantages of BOOT Projects Allows the government to benefit from a project without funding the entire capital cost upfront. This

relieves

budgetary

pressures

for

the

government entity. Attracts private sector financing, expertise, and efficiency. Profit motive ensures that the private sector is disciplined

to

complete

the

project

to

specifications, on-time and on-budget, and that they will operate the project efficiently and with care.

BOOT PROJECTS IN INDIA ROADS The toll road between Ahmedabad and Mehsana (51 km) constructed by L&T . A

six

lane

express

way

between

Jaipur

and

Kishangarh on National Highway-8. An Elevated Mass Rapid Transit System for Thane city (Ring Railway) was given to the Consortium of consultants

consisting

of

M/s

Consulting

Engineering Services (India) Limited (CES), PB Kennedy

and

Donkin

Ltd.,LPT

Consultant

(Malaysia), Architects and Engineers Pvt Ltd.

WATERWAYS INLAND PASSENGER WATER TRANSPORT (IPWT) PROJECT ALONG WEST COAST OF MUMBAI: The project envisages construction of terminal and operation

facilities

at

five

locations

namely

Borivali, Versova, Juhu, Bandra and Nariman Point, and operation of vessels (catamaran / hovercraft) for a concession period of thirty years.

TIRUPUR WATER SUPPLY AND SEWAGE PROJECT, INDIA: • The project is the first build-own-operate-and-transfer (BOOT) effort in South Asia. • The water project is expected to supply the Tirupur area with 185 million liters of water per day and service nearly 1,000 textile units and more than 1.6 million residents in Tirupur and surrounding areas. • The project is on a Build-Own-Operate-and-Transfer (BOOT) basis with a 30-year time stipulation, at the end of which it is to be transferred to the government. • Bechtel is in charge of the 55-km pipeline to deliver water from the Bhavani River into a complex system of 25 reservoirs, which will be constructed by the Indian company Mahindra together with Larsen & Toubro.

SOLID WASTE MANAGEMENT IN KOLHAPUR: The Kolhapur city (Pop. – 450,000) generates an estimated 160 tons of solid waste per day. No organized

collection

system

exists

for

waste

generated in markets. None of the disposal sites have pesticide treatment. The KMC and Zoom Developers signed a 30-year Build-Own-Operate-Transfer

(BOOT)

contract

in

September 2000. The concessionaire (Zoom Developers) agreed to design, construct, operate, and maintain the waste

BOLT (Build Own Lease Transfer) The company builds a facility operating

portion

of

the

leases out the

contract

and

on

completion of the contract returns the facility to the owner. BOLT have failed to take off

due to the poor

contracted work prevalent and BOO (Build Own Operate)

high

cost

of

construction. A project in which the private developer builds, owns and operates a new facility at its own risk. The

government

guarantees

usually

through

provides

long-term

revenue

take-or-pay

contracts for bulk supply facilities or minimum

BLT (Build Lease or Rent Transfer)

A project in which a private developer builds a new facility at its own risk, leases that facility from its government owner, and then operates and maintains the facility for a given period.

BTO (Build Transfer Operate) A

project

transferred

whose to

ownership

public

sector,

managed by a private operator.

is

immediately

but

which

is

BLO (Build Lease Own) A project in which the private developer builds a new facility at its own risk, transfers ownership to the government, leases the facility from the government and operates it at its own risk, and then receives full ownership of the facility at the end of the concession period. In the case of electricity generating capacity, the government usually provides revenue guarantees through long-term take-or-pay contracts for bulk power supply.

BBO (Buy Build Operate) A BBO transaction is a form of asset sale that includes

a

rehabilitation

or

expansion

of

an

existing facility. The government sells the asset to the private sector entity, which then makes the improvements necessary to operate the facility in a profitable manner.  BROT (Build Rehabilitate Operate Transfer)

A project in which a private developer builds an add-on to an existing facility or completes a partially built facility and rehabilitates existing assets, and then operates and maintains the facility at its own risk for a given period.

Thank you!