Ppp in Environment

8/8/2019 Ppp in Environment

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ABSTRACT

The desired object of national development and environment protection is nothing but

improvement of the homeland in order to prepare appropriate environmental conditions for

the flourishing of the intellectual and material potentials of the society. It is obvious that there

is a possibility for the appearance of environmental problems in the course of the

developmental process. Therefore, it has become necessary to employ engineering sciences

for environment protection and to decrease the reverse effects of the civil and developmental

projects on the environment to the minimum possible levels. Historical improvements in

health through parallel upgrading of environment conditions have always depended on a

rapprochement between government and the private sector, with validation by civil society.

Society has not always been so civil, such as the urban protests in the 1830s that pitted

municipal governments in India against the working poor over housing, water and sanitation

conditions. Contentious conditions exist throughout asia, where infrastructure development

and industrial practices often inadvertently threaten health of workers, communities and

childrens; and regulatory control of industry and trade is uneven at best.But it need not be this

way. Government and the private sector can be compatible collaborators in creating a

workable framework for environmental and health protection. Good examples are water, food

and air. There are new, interesting approaches in asia, discussed below, that tap the regulatory

capacity of the public sector and the dynamic efficiency of the private sector. This project

presents a framework for analyzing the role of PPP (public private partnership) in

Environment. This paper will focus on how economic development has affected our

environment and steps taken by government and companies to protect environment under

PPP contract. Case illustration will help to understand the concept in a much enhanced

manner. Strategies and recommendations would be of extreme significance.



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OBJECTIVES

To understand the concept of PPP.

To comprehend the importance of environment.

To figure out the effects of economic development on environment.

To study the steps taken by government and companies under PPP contract,to protect

the environment.

To suggest the recommendations for solving the problems for improving environment

PPP contract.

Methodology

Data for the paper was collected by analyzing the subject matter in the field. The

subject matter reviewed, comprises of government and non government reports,

research journals, text books and web notes. Apart from it, we attended some of the

seminars on environment to comprehend the concepts in depth. Thus, project swathe

the aspects of primary as well secondary data that makes it magnificent.



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PROLOGUE

There was a time when environment was treated as a bottomless phenomenon. The quantity

of consumers was simply trifling before the sheer magnitude of natural resources to be

consumed. Management of natural resources such as forests or minerals was done by locals

who made use of them. There was no profit motive behind exploiting environmental

resources. There were no market forces driving the engines of mass production. Environment

was local. It was managed by locals based on local indigenous knowledge. Time as well as

modern science has proved that traditional local management of environment and natural

resources is the best. Whether it be Indians of Brazil or Africans or Asians, they are the best

caretakers of their resources because their knowledge of their environment is time tested.

Market forces, profit motive, mass production and modern technology have damaged our

natural environment to an alarming extent. Since our attention has been drawn to thisdamage, we must use modern techniques, modern communication and capital to preserve and

improve our natural environment.

Public Private Partnerships (PPP), ³a term which refers to a wide spectrum of possible

relationships between public and private actors for the cooperative provision of urban

infrastructure services, has been proven to be a feasible and attractive development

modality´.

In PPPs the advantages of private sector innovation, access to finance, technological

knowledge, managerial efficiency and entrepreneurial spirit are combined with the social

responsibility, social justice, public accountability, and the grasp on local knowledge

characteristic of the public sector. The cooperative functioning of the two allows for potent

and effective solutions to solve, or at least address, pressing urban environmental challenges.

Now in its second phase, the Public-Private Partnerships for Urban Environment (PPPUE)

project builds on the achievements and accomplishments made during the first phase (2002-

2004). Since the project's launch in March 2002, PPPUE together with its partners have

worked towards raising awareness of the potential of PPPs at both local and national levels

and creating an enabling environment for PPPs in local urban service delivery with continued

capacity building and policy/legislative interventions. Also in the second phase, PPPUE

expanded its coverage from five partner municipalities to ten.



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2.1 ECONOMIC DEVELOPMENT

Agriculture, services and manufacturing industries all contribute to the development of the

Indian economy. The IT outsourcing, software and call center/ BPO industries in particular

have helped propel Indian economic development in recent years.Economic development in India depends on the various sectors that constitute the Indian

economy ± these are primarily the agriculture, services and manufacturing industries.

India is rated as one of the top economies in the world in terms of the purchasing power

parity of the gross domestic product by leading financial entities of the world such as the

International Monetary Fund, the World Bank, and the CIA (as referenced in the CIA World

Factbook).

As far as agriculture is concerned, India is in the second largest in volume of output. Certain

connected sectors of the agricultural sector have played a major role in the development of

the Indian economy by providing employment to a number of people in the forestry, fishing

and logging industries. During 2005, the agricultural sector contributed 18.6% to the entire

GDP, and at least 60% of the total labour force working in India was employed in the

agricultural sector.

Production volume has gone up in Indian agriculture at a consistent rate since the 1950s.

Much of this improvement can be credited to the various five-year plans that were instituted

for the development of Indian agriculture. Developments in irrigation processes, as well as

various modern technologies used have contributed to the overall improvement of

agricultural processes. In the industrial arena, India is 14th in volume of factory output.

Economic developmental roles are also being played in the areas of gas, mining, electricity

and quarrying. All these sectors contribute significantly to the GDP, and provide jobs to

India¶s citizens.

India is regarded as the 15th best economy in terms of work production by the services

sector. A sizeable amount of the Indian workforce is also employed by the service sector. In

the ten-year period between 1990 and 2000, the rate of growth has been 7.5%, which is more

than the 4.5% rate during the 30-year period from 1951 to 1980



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Sectors such as information technology (IT), software development, call centers, IT

outsourcing, business process outsourcing (BPO), and other IT-enabled services have been

the biggest contributors in the services sectior of the Indian economy.

An increasing number of Indian companies are becoming global players. The following

Indian companies are part of the Forbes Global 2000 list:

y Infosys Technologies

y Oil and Natural Gas Corporation

y ICICI Bank

y R eliance Industries

y Steel Authority of India

y State Bank of India

y

Tata Consultancy Servicesy Indian Oil Corporation

y Tata Steel

y National Thermal Power Corporation



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2.2BENEFITS FROM THE EN VIRONMENT

R enewable resources of energy in India are natural resources that can be replenished by

natural processes at a rate comparable or faster than its rate of consumption by humans. Solar

radiation, tides, winds and hydroelectricity are perpetual resources and are considered as

renewable resources of energy as they do not have the danger of non availability. R enewable

resources may also mean commodities such as wood, paper, and leather, if harvesting is

performed in a sustainable manner.

Some natural renewable resources of energy in India include geothermal power, fresh water,

timber, and biomass. A life cycle evaluation provides a systematic means of estimating

renewability of these resources. The term renewable resources have an implication of

sustainability of the natural environment. Gasoline, coal, natural gas, diesel, and other

commodities derived from fossil fuels are non-renewable. Unlike fossil fuels, a renewable

resource can have a sustainable yield.

Solar energy is one of the prime renewable resources of energy in India. It is the energy

derived directly from the Sun. Along with nuclear energy; it is the most copious source of

energy on Earth. Solar energy is the fastest growing type of alternative energy that is

increasing at 50 percent a year. It is the photovoltaic cell, which converts sunlight directly

into electricity. The Sun yearly delivers more than 10,000 times the energy that humans

presently use.

Wind power is consequent from uneven heating of the Earth`s surface from the Sun and the

warm center. Most modern wind power is generated in the form of electricity by converting

the rotation of turbine blades into electrical current through an electrical generator. Windmills

is a much older technology that generated wind energy and is used to turn mechanical

machinery to do physical work, like crushing grain or pumping water.

Hydropower is another form of renewable resources of energy in India obtained from the

movement of water in rivers and oceans (or other energy sources). Water can likewise be

used to generate electricity using turbines, or can be used mechanically to do useful work. It

is a very common resource of energy in India.



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Geothermal power directly exploits the natural flow of heat from the ground. The available

energy from natural decay of radioactive elements in the earth¶s, crust, and mantle is roughly

equal to that of incoming solar energy, especially during the day. Oils from plants and seeds

are often used as a replacement for non-renewable diesel. Methane is also considered as a

renewable source of energy used in some Indian factories. Nuclear power or a breeder reactor

is often used as renewable resources of energy.

India is blessed with abundance of water, sunlight, and biomass. Dynamic efforts during the

past two decades are now bearing fruit as people in all walks of life have become more aware

of the benefits of renewable energy. India has the world`s largest programme for renewable

energy. Government created the Department of Non-conventional Energy Sources (DNES) in

1982. A complete Ministry of Non-conventional Energy Sources was established in 1992

and the Prime Minister controls the activities of this ministry. The activities of this

department promote renewable energy technologies, an environment conducive to promote

renewable energy technologies and renewable energy resource assessment. Creating an

environment conducive for their commercialization, research, development, and production

of biogas units, solar thermal devices, solar photovoltaics, cookstoves, wind energy and small

hydropower units are also some more responsibilities of the ministry

Wind Power in India has made a significant role in the domain of energy resources. India

now ranks as a "wind superpower" with an installed wind power capacity of almost 1167

MW and about 5 billion units of electricity have been supplied to the national grid till date.

The wind resource assessment programme includes wind monitoring and wind mapping that

covers 800 stations in 24 states with 193 wind-monitoring stations in operations. Altogether

13 states of India acquire a net potential of about 45000 MW wind energy. The development

of wind power in India began in the 1990s, and has significantly increased in the last few

years.

Solar water heaters have proved the most popular so far and solar photovoltaic for

decentralized power supply is fast becoming popular all across the rural and remote areas.

More than 700000 PV systems generating 44 MW have been installed all over the Indian

states. Under the water pumping programme more than 3000 systems have been installed so



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far and the market for solar lighting and solar pumping is far from getting saturated. Solar

drying is one area, which offers very good scenario in food, agricultural and chemical

products drying applications. More than 700000 PV systems of capacity over 44MW for

different solar applications are installed all over India. The market segment and usage is

mainly for home lighting, street lighting, solar lanterns and water pumping for irrigation. As

the demand for power grows in the nation, traditional fuel based power-generating capacity

also grows, SPV based power generation is believed to be a source to cater to the expected

deficits. Especially in rural areas, where the likelihood of conventional electric lines is

remote, SPV power generation has become best choice.

India is gifted with economically exploitable and feasible hydro potential assessed to be

about 84,000 MW at 60% load factor. In addition, 6780 MW in terms of installed capacity

from Small, Mini, and Micro Hydel schemes have been assessed in India. Some of the

advantages of Hydro Power include saving scarce fuel reserves, cost of generation, operation

and maintenance is far lower than the other sources of energy, ability to start and stop quickly

and immediate load acceptance makes it suitable to meet peak demand and for enhancing

system reliability and stability, has higher efficiency (over 90%) compared to thermal (35%)

and gas (around 50%) and so on.

Indian geothermal power is another active renewable resources of energy in India that have

the capacity to produce 10,600 MW of power- a figure which is five time greater than the

combined power being produced from non-conventional energy sources such as wind, solar

and biomass. With escalating environmental problems with coal based projects, India has to

depend on clean, cheap, rural based and eco-friendly geothermal power in future. Nuclear

power is the fourth-largest source of electricity in India after thermal, hydro and renewable

sources of electricity in India. As of 2008, India has 17 nuclear power plants in operation,

generating almost 4,120 MW while 6 other are under construction and are expected to

generate an additional of 3,160 MW approximately. As of 2009 survey, India stands 9th in

the world in regards to number of operational nuclear power reactors. India stands at a

promising position to acquire one of the most prestigious rankings as a supreme nation using

renewable resources of energy at its best.



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Non-renewable resources of energy in India refers to the natural resources of energy that

cannot be produced, regenerated, re-grown, or reused on a large scale. These non-renewable

resources usually exist in a fixed amount and are consumed much faster than nature can

recreate them. Fossil fuel including coal, petroleum and natural gas are some examples of

non-renewable resources of energy in India. On the other hand, resources such as timber or

metals, which can be recycled, are known as the renewable resources of energy in India. A

non-renewable resource is always strained down with anabolic procedures that use up energy.

Non-renewable resources of energy in India such as coal, petroleum, oil and natural gas

require millions of years to form naturally and cannot be replaced as quickly as they can be

consumed. Eventually natural resources will become too costly to reap and mankind will try

to find other sources of energy. At present, the main energy sources used by the Indian

population are non-renewable sources of energy.

C oal occupies the premier position as a non-renewable resource of energy in India. The coal

industry in India contributes immensely to the present commercial and economic successes.

Industries such as steel and carbo-chemicals largely depend upon coal industry. The process

of coal extraction in India was started in the year 1814. Now, after 60 years, petroleum has

become an important source of energy in India and also has become an important public

sector undertaking with abundant capable officers and updated technology is being used that

is comparable with some of the most advanced nations of the world.

The role of oil and natural gas in India is very significant as it is one of the biggest

contributors to both the Central and State treasuries. Natural gas is presently one of the most

preferred fuels due to its environmentally gentle nature, greater efficiency and cost

effectiveness. The demand for natural gas has greatly increased in the last two decades at the

global level. In India too, the natural gas sector has gained significance, particularly in the

last decade, and natural gas is said to be the fuel of the 21st century.

Non renewable sources of energy have been used since the primitive times in the nation and

the increase in population justifies the increase in use of these resources. However, the

unimaginable usage of these resources has created an air of conservation requirements. These

non-renewable resources of energy are now of a serious concern to the Indian government.



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2.3 PPP INEN VIRONMENT

There was a time when environment was treated as a bottomless phenomenon. The quantity

of consumers was simply trifling before the sheer magnitude of natural resources to be

consumed. Management of natural resources such as forests or minerals was done by locals

who made use of them. There was no profit motive behind exploiting environmental

resources. There were no market forces driving the engines of mass production. Environment

was local. It was managed by locals based on local indigenous knowledge. Time as well as

modern science has proved that traditional local management of environment and natural

resources is the best. Whether it be Indians of Brazil or Africans or Asians, they are the best

caretakers of their resources because their knowledge of their environment is time tested.

Market forces, profit motive, mass production and modern technology have damaged our

natural environment to an alarming extent. Since our attention has been drawn to thisdamage, we must use modern techniques, modern communication and capital to preserve and

improve our natural environment.

India is equipped with a solid brigade of legal provisions and policy documents designed to

protect and improve the natural environment. Article 48(a) directs the State to take strong

measures not only for its protection but also work actively for its improvement. Article 51(a)

incurs a corresponding duty on the citizen to do the same. We have an Air (Prevention and

Control of Pollution) Act and a similar Water Act. We have an Environmental Protection Act

of 1986 amended from time to time to control hazardous pollutants. Each one of our nine five

year plans contains a chapter on safeguarding the environment. We have Forest Acts

stretching from 1861 to 1988. We have State and Central boards for the prevention of

pollution. Our Judiciary has been exceptionally active in allowing public interest litigations

that have resulted in the State being directed to take measures for its improvement or to

refrain from taking measures that would degenerate our ecology. However, the core issues

effecting or rather controlling India's natural environment have remained the same.

Who should control India's forest wealth? Should the traditional local tribal manage forest

resources with his age-old knowledge reducing the government to a mere assistant? On the

other hand, should forests be managed by the Central government? Before the British came to

India, forests were the property of locals who survived on them as well as took loving care of

them. As British gained control of India, they simply threw the tribal out of this management.

Their concern was entirely different. They gave contracts for felling forests and such felling



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was immense all across Indian sub-continent. They wanted to increase revenue by selling

timber and converting forestland into agricultural land. Timber was required for the

expansion of railways, construction of bridges and buildings. R ight from the forest Act of

1861 till 1927, the British disassociated the local traditional dweller from its management.

All these Acts contain a provision of arrest without warrant for anyone who encroached upon

forestland without permission from the British officer. Whether it be a cattle grazier or a

woman collecting dry wood for fuel. The same practice has continued after independence.

Forest wealth has been centralized and the local dweller is as angry with the administration as

ever. Since he gets no incentive by protecting his forest, he does not bother about it anymore.

Until this issue of local versus government control is resolved, forest resources will continue

to be exploited and mismanaged in India.

CHAR ACTERISTICS OF PPP:-

Growing popularity:- Since the 1990s, there has been a rapid rise of PPPs across the world.

Governments in developing as well as developed countries are using PPP arrangements for

improved delivery of infrastructure services. Governments are building transport (roads,

railways, toll bridges), education (schools and universities), healthcare (hospitals and clinics),

waste management (collection, waste-to-energy plants), and water (collection, treatment, and

distribution) infrastructure through PPP. PPP is becoming the preferred method for public procurement of infrastructure and infrastructure services projects throughout the world.

Globally, governments are increasingly constrained in mobilizing the required financial and

technical resources and the executive capacity to cope with the rising demand for water

supply, sewerage, drainage, electricity supply, and solidwaste management. R apid economic

growth, growing urban population, increasing rural±urban migration, and all-round social and

economic development have compounded the pressure on the existing environment, and

increased the demand± supply gap in most of the developing world.

Countries and governments, especially in the developing world, are experiencing increasing

pressure from their citizens, civil society organizations, and the media to provide accessible

and affordable infrastructure and basic services. The pressure has also come from the

international compact on Millennium Development Goals (MDGs), under which country



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progress in terms of access to safe drinking water, sanitation, health, etc. is being monitored.

R ising costs of maintaining and operating existing assets, inability to increase revenue and

cut costs and waste, and rising constraints on budgets and borrowing, do not allow

governments to make the required investments in upgrading or rehabilitating the existing

environment

Need for new financing and institutional mechanisms. Governments have been pushed to

exploring new and innovative financing methods in which private sector investment can be

attracted through a mutually beneficial arrangement. Since neither the public sector nor the

private sector can meet the financial requirements for environment in isolation, the PPP

model has come to represent a logical, viable, and necessary option for them to work

together.

Benefits and strengths. The emergence of PPPs is seen as a sustainable financing and

institutional mechanism with the potential of bridging the environment gap. PPPs primarily

represent value for money in public procurement and efficient operation. Apart from enabling

private investment flows, PPPs also deliver efficiency gains and enhanced impact of the

investments. The efficient use of resources, availability of modern technology, better project

design and implementation, and improved operations combine to deliver efficiency and

effectiveness gains which are not readily produced in a public sector project.

PPP projects also lead to faster implementation, reduced lifecycle costs, and optimal risk

allocation. Private management also increases accountability and incentivizes performance

and maintenance of required service standards. Finally, PPPs result in improved delivery of

public services and promote public sector reforms.



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PPP strengths and effectiveness

Access to project finance. The foremost benefit of adopting the PPP route is the ability to

access capital funding from the private sector, considering that funding is getting increasingly

limited from public sector budgets. Thus, PPPs allow governments to overcome their

budgetary and borrowing constraints and raise finance for high-priority environmental

projects.

y R obust And Dynamic Structure;

y Government In An Enabler R ole;

y Government Ownership Is High;

y Governance Structure Ensures Consumer And Public Interests Are

Safeguarded;

y Commercial Interest Protected;

y Domicile R isks To Parties That Are Well Equipped To Deal With

Them;

y Transparent And Well-Conceived Contracts;

y Documentation R ecognizes R ights And R esponsibilities Of All

Project-R elated

y Parties;

y Concerns Of All Stakeholders Addressed;

y Involves Participation Of A Large Number Of Institutions:

Government, Politicians,





Safeguarded;



Them;



Project-R elated

y Parties;








Safeguarded;



Them;



Project-R elated

y Parties;








Safeguarded;



Them;



Project-R elated

y Parties;






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3.1 Effects of Economic Development on environment

The issue of economic growth versus environmental conservation can also be seen as

developed countries vs developing ones. Industrial countries such as the USA and Germany

have depended upon polluting industries for their wealth. Now they fear that uncontrolled

economic development in the Third World will lead to environmental disaster. They point out

that massive clearing of tropical rainforest for farming threatens biodiversity and may affect

the global climate. At the same time relying upon heavy industry adds more pollution to the

air, soil and water sources, while a richer population demands more energy, often produced

from burning dirty fossil fuels such as coal. Developing countries such as China and Brazil

point out that they must make industrialisation and economic development a priority becausethey have to support their growing populations. Developing countries must address current

problems; they cannot afford to worry about the distant future. They also point out that as

First World countries are most to blame for current environmental damage, it is unfair to

demand that developing nations limit their own growth to solve these problems.

We have already wasted and destroyed vast amounts of natural resources, and in so doing

have put earth at risk. We must preserve the earth for our children and grandchildren. In any

case, poverty and environmental damage are often linked. Destroying the rainforest gives

native peoples nowhere to go except urban slums. Polluted water can lead to crop failures.

Climate change will turn fertile fields into desert and flood coastal areas where hundreds of

millions live. Developing countries have to choose sustainable development if they want a

future for their people.

No one wants to stop economic progress that could give millions better lives. But we must

insist on sustainable development that combines environmental care, social justice and

economic growth. Earth cannot support unrestricted growth. Companies in developed

countries already have higher costs of production because of rules to protect the environment.

It is unfair if they then see their prices undercut by goods produced cheaply in developing

countries at the cost of great pollution.

Unchecked population growth has a negative impact on any nation, as well as on the whol



15

planet. Both the poverty and the environmental problems of sub-Saharan Africa are largely

the result of rapid population growth putting pressure on limited resources. At the same time

China has become wealthy while following a ³one-child´ per couple policy. Limiting

population growth will result in a higher standard of living and will preserve the

environment.

Nations are losing more from pollution than they are gaining from industrialisation. China is

a perfect example. Twenty years of uncontrolled economic development have created serious,

chronic air and water pollution. This has increased health problems and resulted in annual

losses to farmers of crops worth billions of dollars. So uncontrolled growth is not only bad

for the environment, it is also makes no economic sense.

Looking after our fragile world has to be a partnership. Climate change will affect the whol

planet, not just the developed world. In fact it is likely to have particularly terrible effects on

developing countries as sea levels rise, deserts advance, and natural disasters become mor

common. It is no use Europe trying to cut its emissions into the atmosphere if unchecke

growth in China and India leads to much greater overall pollution. Instead, developed

countries need to transfer greener technologies to the developing world, paying for

environmental protection and making sustainability a condition for aid.

The Green R evolution is threatening the biodiversity of the Third World by replacing nativeseeds with hybrids. We do not know what the long-term environmental or economic

consequences will be. We do know that in the short run, such hybrid crops can cause

environmental problems by crowding out native plants and the wildlife which relies on them.

The farmer growing hybrid crops must buy costly new seed every year because it cannot be

saved to plant the following year¶s crops. Farmers using hybrid seeds in what was the richest

part of India went bankrupt. As a result, fertile lands lay idle and unploughed, resulting in

droughts and desertification.



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3.2 EX L IT TI N ENVIR NMENT R E N MI DEVEL MENT

Entry Points for Action

HUMAN ACTIVITIES IMPACTS/CAUSES STRATEGIES RAPID URBAN GROWTH Rapid uncontrolled growth

of urban areas, particularly

low income.

INSUFFICIENT LAND AND HOUSING

SUPPLY Insufficient serviced land and shelter.

Poorly functioning urban land and

housing market

Over-regulated prices

Lack of affordable housing for poor.

PROPERTY RIGHTS/MORTGAGES/

REGULATIONS Reform property rights

Develop mortgage financing

Introduce affordable standards and target

subsidies to the poor

Reduce unneeded regulations, government

interventions and subsidies.

RAPID DEMAND FOR

SERVICES Rapid increase of demand

for services: water supply,

sanitation, drainage, solid

waste collection, and

transport; both in quantity and

quality

INABILITY TO PROVIDE BASIC

ENVIRONMENTAL INFRASTRUCTURE

AND SERVICES Domination of supply by government

monopoly

Prices heavily regulated

Heavy subsidies

DEMAND MANAGEMENT/SUBSIDY

REFORM /DECENTRALIZATION Introduce pricing and demand management

Reduce subsidies

Move toward decentralization, privatization,

participation

UNCONTROLLED POLLUTED WATER AND CHARGES/SUBSIDIES/





18

pr i

buil i

!

" # $

%

& $

'

$

l#

p proper t(

r i!

)

t%

LACK OF CONSIDERATION

FOR ENVIRONMENTAL

HAZARDS IN

DEVELOPMENT

Natur al and 0

an-made

1

azar ds

HIGH-RISK AREAS2

ITH SEVERE

AFFECTS FROM DISASTERS

Poor l3

f unctioning land markets

Ineff ecti4

e land policies

Poor constr uction pr actices

Inadequate regulation and enf or cement

5 ow- income settlements alongside

6 azar dous acti4

ities

ENABLEMENT /DISINCENTIVES/

ENFORCEMENT /PREPAREDNESS

Enable land markets

Provide disincentives to occupation of 7 igh-

r isk areas, incentives f or using disaster -

resistant constr uction techniques

Introduce and enf or ced environmental

zoning

For mulate ur ban disaster preparedness

plans and strengthen response capacit8



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3.3 Environmental issues related to PPP projects

Shift from Negotiation to Competitive Bidding. Initial project ts were awarded on

negotiation basis, as not many private players were interested in the bidding process. This

situation changed over the years for three reasons: (a) risk profiles (primarily traffic and

regulatory) become clearer and (b) some projects demonstrated viability, and (c) user

charges were accepted with time. Competitive bidding had established trust in the public and

political circles. In the future, the projects were expected to be awarded only on competitive

bidding.

Project Structure/Size. Initially, projects of smaller sizes were awarded as no bidder was

ready to take a long term contract. However, the average length of award has been increasing

over the years. In a network infrastructure like roads, it is very important to have the whole

network in good quality for optimal returns. One poor stretch of road may dissuade a section

of users from using the whole corridor as the perceived benefit may become marginal. In

such cases, all the private players stand to lose due to the poor maintenance by one player.

The government was yet to come up with a mechanism to ensure that all the players within a

sub network provide good quality service.

Willingness to Pay. Initially the infrastructure was understood as a facility to be provided by

the government and there were protests against asking commuters to pay for the use of roads.

However, with time, users realized the benefit from such roads and slowly agreedto the

concept of a user fee.

R egulatory elays. The environmental regulations were simplified and to a large extent and

as time went on the time span for each of the activities, as related to regulation, was specified

in the Act. R esettlement and rehabilitation (R&R ) controversies (core of land acquisition

problems) were also dealt with by modifying the regulation and allowing for higher

compensation. However, this was a lengthy process as land markets were distorted due to

regulatory and informational asymmetry which lead to excessive under pricing of land under

present circumstances.

R eligious Sentiments. Some of the projects have been delayed as the prayer halls were

encroaching on the right of way of the road. Sometimes, road alignments had to be diverted

to avoid hurting religious sentiments. In some case, these building were reconstructed or



20

shifted by the government to clear the way. These were not considered in the original

estimate and hence led to cost and time overruns.

Absorption of Economic Loss due to elays. The economic costs of delays are very high

for mega projects. In case of a road project, congestion would lead to higher inventory

carrying costs, higher inventory requirements, increased pollution, and higher fuel

consumption. In most cases, the cost gets transferred to the tax payers and users of the facility

in the long run. The fairness of this transfer can be questioned.



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STRATEGIES

What can the public-private sector do to improve environmental services?

Private sector involvement in infrastructure provision has been increasing rapidly over

the past decade, even in low-income countries. The fastest growth has been in the energy

and telecommunications sectors but an increasing number of initiatives involve water,

sanitation and waste mana ement. Most of these have been in lar er and more affluen

4.2 Steps taken b y the government under ppp contract

Speedy And Flexible Procedures For Approval Of Projects;

Increased Vgf Financing For Hill And Special Category States;

Fast-Tracking Of Vgf Projects For Disadvantaged States And Areas;

R elaxation In Project Detail R equirements For Initial Eligibility And In-Principle Approval;

Eligibility For Projects Implemented Through SpvR oute, Like The R ailways;

Inclusion Of Projects Through The Swiss Challenge R oute, R ural Sector Projects, And

Unfinished Projects;

Inclusion Of Land Costs Under Vgf Financing; And

Comprehensively Updating The Vgf Documentation To Include These Suggestions.

To save time, costs and efforts, it is suggested that the VGF approval procedure could be

phased in three parts, namely, (i) in-principle eligibility: after prefeasibility studies are

introduced; (ii) in-principle approval; and (iii) final approval.

Capacity building. TA(technical assistance) and capacity building have been identified as the

topmost priority. Areas identified for central assistance are:

Formulation Of PPP Policy And Guidelines;

Formulation Of Environment Act And Development Of PPP R egulatory Framework;

Setting Up PPP Cells At State Level;

Harmonized And Centralized Handling Of Ppps In The States;

Funding And R esources For Developing And Structuring Projects, As In The Case Of Mega

Projects Such As In Water, Power Etc. In Line With The JNNUR M;

Formulation Of Legally And Financially Sound Model Procedure Covering State

Government Initiatives And Priorities 59



22

60 Facilitating Public - Private Partnership various stages from conceptualization to physical

construction, contract monitoring and scheduling;

Frameworks For Evaluating The R evenue And R eturn Of The Project;

Developing And Disseminating Standardized Guidelines On Public Sector Comparator

(Psc) And Its Comparison With Private Sector Predictor And Also With Preferred/Lowest

Bid;

Mcas (Model Concession Agreement)And Other Model Documents Across A R ange Of

Infrastructure Sectors;

Methodology For Finalizing Projects On The Swiss Challenge Model;

Updated Information On Ppps Being Executed Across Sectors And States;

Potential Financing Sources, Including Long-Term Debt, Tapping Across Various Sectors;

Assistance Of International Funding Agencies At Concessional Terms, Especially For

Critical Infrastructure Where The Private Sector May Not Be Immediately Interested;

Streamlined And Time-Bound Procedures For Granting Approvals R elating To

Environment, Land Acquisition, R ailways, Airport Authority, Etc.

Recommendations for improving environment under Public Private Partnership Contract.

y The Central Government, shall have the power to take all such measures as it deems

necessary or expedient for the purpose of protecting and improving the quality of the

environment and preventing controlling and abating environmental pollution.

y Such measures may include measures with respect to all or any of the following

matters, namely:

i. co-ordination of actions by the State Governments, officers and other authorities-

(a) under this Act, or the rules made thereunder, or

(b) under any other law for the time being in force which is relatable to the objects of

this Act;

ii. planning and execution of a nation-wide programme for the prevention, control and

abatement of environmental pollution;

iii. laying down standards for the quality of environment in its various aspects;



23

iv. laying down standards for emission or discharge of environmental pollutants from

various sources whatsoever.

v. Provided that different standards for emission or discharge may be laid down under

this clause from different sources having regard to the quality or composition of the

emission or discharge of environmental pollutants from such sources;

vi. restriction of areas in which any industries, operations or processes or class of

industries, operations or processes shall not be carried out or shall be carried out

subject to certain safeguards;

vii. laying down procedures and safeguards for the prevention of accidents which may

cause environmental pollution and remedial measures for such accidents;

viii. laying down procedures and safeguards for the handling of hazardous substances;

ix. examination of such manufacturing processes, materials and substances as are likely

to cause environmental pollution;

x. carrying out and sponsoring investigations and research relating to problems of

environmental pollution;

xi. establishment or recognition of environmental laboratories and institutes to carry out

the functions entrusted to such environmental laboratories and institutes under this

Act;

xii. collection and dissemination of information in respect of matters relating to

environmental pollution;

xiii. preparation of manuals, codes or guides relating to the prevention, control and

abatement of environmental pollution; such other matters as the Central Government

deems necessary or expedient for the purpose of securing the effective

implementation of the provisions of this Act.

y The Central Government may, if it considers it necessary or expedient so to do for the

purpose of this Act, by order, published in the Official Gazette, constitute an authority

or authorities by such name or names as may be specified in the order for the purpose

of exercising and performing such of the powers and functions (including the power

to issue directions under section (5) of the Central Government under this Act and for



24

taking measures with respect to such of the matters referred to in sub-section (2) as

may be mentioned in the order and subject to the supervision and control of the

Central Government and the provisions of such order, such authority or authorities

may exercise and powers or perform the functions or take the measures so mentioned

in the order as if such authority or authorities had been empowered by this Act to

exercise those powers or perform those functions or take such measures.

As considerable adverse environment impact has been caused due to degradation of the

environment with excessive soil erosion and water and air pollution due to certain

development activities therefore it is necessary to protect the environment. This can be

achieved only by careful assessment of a project proposed to be located in any area, on the

basis of an environment impact assessment and environment management plan for the

prevention, elimination or mitigation of the adverse impacts, right from the inception stage of the project.

The Central Government has passed certain notifications laying that the expansion or

modernisation of any existing industry or new projects listed shall not be undertaken in any

part of India, unless it gets environmental clearance by the Central Government, or the State

Government.



25

Case Study

Bangalore Mysore Infrastructure Corridor

Facts

y The Bangalore Mysore Infrastructure Corridor (BMIC) was envisaged, as early as

1988, with the twin objectives of connecting Bangalore and Mysore (two rapidly

growing cities in Karnataka) with an expressway and developing the infrastructure

around the periphery of Bangalore city and around the expressway.

y The project was awarded by Karnataka (a state government within whose jurisdiction

the stretch was) on a ³Build Own Operate Transfer ³ (BOOT) basis to Nandi

Infrastructure Corridor Enterprises Ltd (NICE) in October 1998 on negotiation basis,

after an unsuccessful round of bidding for the project.

y The project scope included construction of the expressway between Bangalore and

Mysore and five townships along the expressway (R aghuram and Sundaram, 2009

forthcoming).

K ey Issues

y The clearance from Karnataka SPCB required public hearings. The first public

hearing was held on 9 March 2000 in Bangalore and subsequent hearings were to be

conducted at Mandya and Mysore.

y These hearings were postponed due to lack of information among the public regarding

the project,

y Hearings were then conducted on 30 June in Mysore, 3 July in Mandya, and 5 July in

Bangalore.

y On 1 August 2000, the Karnataka State Pollution Control Board (KSPCB) issued a

NOC to the project contingent on several conditions.

y On 8 August 2001 the MOEF gave a clearance to the road/expressway component of

the project, subject to meeting the specified condition

y The approval did not go well with the environmentalists. Many environmentalists

claimed that rare species of flora and fauna were affected.



26

y Contamination of water (in lakes in the vicinity) was another challenge that the

project was facing.In January 2008, BWSSB decided not to permit NICE to shift

water and sewerage lines into four locations as it could have affected the water supply

and sanitation in the city.

Alternative courses of action

y NICE had entered into an agreement with Bangalore Water Supply and Sewerage

Board (BWSSB) for use of more than 150 MLD of water which was 1/4of the amount

of the water supplied to Bangalore city.

y Some farmers contested that the notice was vague in its message as the exact use was

not stated.

y In addition, there were ongoing disputes on the Cauvery river water between Tamil

Nadu and Karnataka. BMIC was expected to receive 85 MLD of waste water free for

non potable use, depriving farmers who used it for various agricultural purposes.

y The discrepancy in land requirement created both political and legal obstructions for

the project.

Actions taken

y On 24 January 2008, the High Court of Karnataka directed the BWSSB to shift the

water and sewage pipelines in four locations so that NICE could complete the

peripheral road, which was part of the BMIC project.

y The notice for land acquisition was served under the Karnataka Industrial Areas

Development Board (KIADB) Act and the purpose was stated as industrial use.

y The government order (GO) of 1995 identified 18,313 acres (7,414 hectares) as the

land requirement for the project. In 1997 the FA specified 20,193 acres (8,186

hectares) of land while the formal award of they contract to NICE in 1998 specified 23,846 acres (10,659 hectares). By 2004, KIADB

had notified 29,258 acres (12,631 hectares) for land acquisition.



27

R ecommendations

y The decision to notify or denotify a plot could have been taken depending on the

personal gain that could be made by the politicians and the administrators.

y This rent seeking was facilitated by the absence of any detailed project report which

gave the decision makers absolute discretion.

y The project created further controversies when the more than half a dozen top

officials, who awarded the project, accepted employment offers from the private party

after their retirement and within few years of the award itself.



28

Conclusion

The acceptance of a user fee and development of alternate sources of revenue had helped

attract larger investments in megaprojects. With increasing private sector participation,

delays due to project management is expected to reduce significantly and the focus would be

left to environmental and land acquisition issues. The modifications in the regulatory

framework on these issues are moves in the right direction. However, methods used for

assessments related to environmental impact and land acquisition are still conducting manual

surveys, making the whole process time consuming. Technology could be a good instrument

in reducing the time required for these studies as well as in bringing transparency in the

system. Decentralization with capacity building at the state level would also help in the long

run in reducing these delays.



w iblography

www.indianet.com

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www.dillionindustry.com

www.environmentalprotectionact.com

www.altavista.com

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BIBLOGRAPHY

Justice, posterity, and the environment by Wilfred Beckerman and Joanna Pasek.

Fairness and futurity: essays on environmental sustainability and social justice edited

byAndrew Dobson.

Public private partnership by Yescumbe, E.R .

The challenge of public private partnership by Hodge, Greve.c

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