Letters: PPP perils

Apropos the editorial “Line of warning” (July 3), a 2003 European study of the anatomy and ambition of over 300 mega projects in 30 countries describes malaise such as the one experienced in the Delhi Metro public-private partnership deal.

It tells us how in mega-rail projects, the costs are underestimated and traffic projections overestimated with a view to getting the project approved. They conclude that the “cost estimates used in public debates, media coverage and decision-making for transport infrastructure development are highly, systematically and significantly deceptive” and “so are the cost benefit analysis in to which cost estimates are routinely fed, to calculate the viability and ranking of projects.

Such misrepresentation of costs is likely to lead to the misallocation of scarce resources, which in turn would produce losers among those financing and using infrastructure, be they taxpayers or private investors.” It also illustrated with a US case where the “actual ridership was 28 to 85 per cent, lower than the forecast ridership…”. Thus, we are likely to face far bigger compensation claims than the current Rs 2,800 crore.

S Subramanyan Navi Mumbai

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