Allow rebid of underperforming PPP projects: Survey

At a time when a number of public private partnership (PPP) projects are in trouble, the ministry of finance has pitched for allowing flexibility so that a contract can be withdrawn and put up for rebid when a private party underperforms. It has also stressed the need to study the PPP experience and build some central capacity to help ministries, authorities and states structure contracts and renegotiate troubled ones.

In the Economic Survey, tabled today in Parliament, the ministry said the global experience indicated that PPPs work when they combine the efficiency and risk assessment of the private sector with the public purpose of the government sector and not vice versa. “India should be careful not to undertake PPPs that do not apportion risks and responsibilities sensibly,” it said.

Besides GMR and GVK, who want to exit highway projects, the Delhi Airport Metro Express link and ABG’s exit of Kandla port terminal are some of the instances of troubled PPP projects.

There are 900 PPP projects in the infrastructure sector with total project cost of Rs 5,43,045 crore compared to 600 projects of Rs 333,083 crore on March 31, 2010. This has made India as one of the leading PPP markets in the world.

The Survey quoted a World Bank report that said India was the top recipient of private participation in infrastructure since 2006 and implemented 43 new projects which attracted total investment of $20.7 billion in 2011. The country accounted for almost half of the investment in new PPI projects implemented in developing countries during the first semester of 2011. In the South Asian region, India attracted 98 per cent of regional investment and implemented 43 of the 44 new projects in the region.