Not many takers for PPP in urban services

Not many takers for PPP in urban services

http://www.livemint.com/2008/11/11141821/Not-many-takers-for-PPP-in-urb.html

New Delhi: Admitting slow pace of growth of public private partnership
(PPP) in the urban sector, the Centre has said that there is a need to
pursue this route more actively.
“The reasons behind the slow pace of growth of PPPs in urban sector is
that these projects are extremely complex and require involvement of
multiple agencies,” said Urban Development Secretary M Ramachandran
here while addressing a CII seminar.
“There is a perception that urban services such as water supply, solid
waste management and sewerage are less attractive that other
infrastructure like urban transport. This perception is largely driven
by the inadequacy of user charges, thus far, to meet operating and
maintenance expenses,” he said.
Emphasising the need for PPPs, he said that private investment will
bridge the financing gap and add to the viability of the projects.
Airports, power projects and urban transport systems have found
willing private investors.
Highlighting the role of urban local bodies (ULB) under Jawaharlal
Nehry National Urban Renewal Mission (JNNURM), he said that while some
ULBs are slow to plan PPPs, there are also a few who have taken a
pro-active role in proposing projects on PPP model.
There are about 44 projects approved under JNNURM for PPP model. The
projects involve solid waste management, bus rapid transport system,
water supply and sewerage.
Pointing out a number of initiatives to encourage PPPs in urban
sector, he said that there is a well defined framework for undertaking
PPP projects.
The viability gap funding mechanism, and India Infrastructure Project
Devleopment Fund are all designed to meet specific requirement of PPP
projects.
Cities are bearing the brunt of rapid urbanisation and the city
infrastructure has not kept pace with the growth.
“It is an accepted fact that government alone will be unable to
meeting the infrastructure requirements, both in terms of financing
the infrastructure and also in terms of meeting service delivery
standards,” Ramachandran said.
PPPs have now been widely accepted as a model which can augment the
government’s infrastructure delivery capacity.
A PPP project involves sharing risks, roles and responsibilities
between different stakeholders such as the private contractor,
government and community.
However, pointing out the absence of any clear cut framework for
regulation of PPP projects other than the concession agreement,
Ramachandran said: “As multiple PPP projects are taken up in the urban
areas, there will be an urgent need to evolve a regulatory framework
that will deal with tariff setting and revisions, performance
monitoring and adherence to service standards.”
Government has undertaken initiatives to provide opportunity for urban
local bodies to adopt innovative models under the PPP model.

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Filed under JNNURM, Privatisation of Municipal Services, Urban Infrastructure Finance, Urban reforms Agenda

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