Multiple options to fund PPP in health, education

The government is working on multiple options for financing public-private partnership (PPP) projects in social sectors like health and education. The PPP framework for these projects, like building hospitals and schools, will be different from the existing regime for infrastructure.

Officials said central assistance for financing such projects could be available either directly through the finance ministry or routed through respective ministries (health and education) or even through the Planning Commission.

In a meeting held yesterday, representatives from states, Planning Commission, ministries of health, education, finance and law also discussed models through which government support could be provided to enable access to the poor in hospitals or educational institutions built under the PPP model. “The idea is that both the government and private sector should work together, while the burden for providing access to the poor should rest with the government,” a senior official who participated in the meeting said.

Under the current PPP framework used for the infrastructure sector, mainly covering road, metro and some state government projects, the Planning Commission frames standardised contractual documents for laying down the terminology related to risks, liabilities and performance standards. The schemes and government grants for individual projects are approved by the Public Private Partnership Appraisal Committee (PPPAC) headed by secretary (economic affairs) in the finance ministry.

The finance ministry had expressed divergent views on the role of the Planning Commission in PPP projects, arguing that such partnerships strictly fall within its domain. Officials said such difference of opinion were common, but finally all the parties have decided to work together.

In its presentation to Prime Minister Manmohan Singh last week to formalise the draft approach paper to the 12th Plan, the Commission had pitched for expanding PPP in health and education sectors. The Prime Minister heads the Commission. “The role of PPP in secondary and tertiary healthcare must be expanded, while such models in school and higher education should also be explored,” the presentation said.

While the final approach paper to the 12th Plan is in its formative stage, the Commission has started working on framing model concession agreements to involve private partners in developing and operating hospitals and educational institutes.