& Governance - PPPs& Governance - PPPs
March 2013
2
Urban Growth • 5 times – the number by which GDP will have multiplied by 2030
• 590 million people in cities ! twice the population o" U#$
• % 2&2 trillion capital investment needed – %'&2 trillionincapitalinvestment
– !"# of capital investmentfrom ebt an PPP
• (00 900 million s)"t o" commercial residential spaceneeds to be built ! a *hica+o every year
• 20 times than the past decade o" the capacity o" roads, metros and subways need to be created
#ource- .ndia/sUrban $waenin+, 1cinsey Global .nstitute
• stimated investment "or urban in"rastructure over the ne4t 20 years – s 39&2 6ah *rore at 2009'0 prices 78P* eport
:ive lements – :undin+, Governance, Plannin+, #ector Policies and #hape
• :undin+ – where will resources come "rom;
 
fe' proects %roune
roun !
 
*omentum subsie
1nset of pessimism
23orts to prepare PPP proects 4i%. +G1 opposition 4i%. pro5le proects in Del.i6 *umbai6 Faile $uccessful proects also emer%e
*an on%oin% initiatives
,aitin% for commercial results
First initiatives
Poor results
Pune6 46 Goa6 8an%alore 8ulk 'ater 7 9-: Cr Faile
$onia ;i.ar6 Del.i6 $an%li 7 8ulk 'ater
8an%alore 7 <e.ab6 1&*
= Cr
Faile
=ater
•  >iruppur =ater #upply – the ?rst attempt; – $bout 20@ urban, and A0@ industrial
• by the time the proBect was made, circumstances were unmadeC
• isahapatnam =ater #upply – the pretender – #imilar structure 20@ urban and A0@
industrial • Eut somewhere when the EF> was bein+
awarded, a )uestion o" conscience came up& $re contracts not better "or all concerned;
• Pilots – U=$#.P, a+pur etc& – 1ana+ement contracts – near ris "ree
•  >i+er tastin+ the bloodH is upscalin+ on similar model practical;
• :ull city models –  >ariIs and adherence to
a+reements
• 6esser ?nancial bids H more )uestions 7pre bid )ueries
•Growin+ interest in participation
#olid =aste
1ana+ement
o" the proBect
asset li"e
EFF> 20 years
 >reatment J Disposal DEFF>, EF> 20 K 25 years  >reatment EFF 20 35 years Disposal DEFF>,
EFF>
 
#olid =aste • 6ucnow Eiomethanation
– =as the technolo+y inappropriate, or did the U6E literally e4pect N+ritto+as/;
•  >hiruvananthapuram *ompostin+ – 8ow much waste does the city +enerate
• “Misfortunes one can endure--they come from outside, they are accidents. But to suer for one's own faults--ah!--there is the sting of life.” Fscar =ilde
• Ean+alore – the ?rst sanitary land?ll in the country – 6and;
• OIn any collection of data, the gure most oiously correct, eyond all need of chec"ing, is the mista"e.” :ina+les >hird 6aw
• $ number o" tippin+ "ee based contracts have been awarded
 
(
Urban >ransport
• Fne o" the earliest 6> system awarded was in Ean+alore, but later cancelled
• $ "ew lar+e proBects bidK awarded – =ith cape4
• 1umbai, 8yderabad 7Q, 8aryana
• Euses-
– .ndore, a success"ul model • .nterestin+ly, why is this model not widely replicated;
– $hmedabad E>
 
• $ lar+e number o" proBects bein+ attempted on this "ormula
 
• :easibility studies provide only a partial picture – proBects not
?nancially "ree standin+QQ
– =ater- >ariIs set to recover only FJ1 costs, and a"ter "actorin+
eVciencies, there is a de?cit in ?nances&
– #=1- 8ardly any user char+es or marets "or sale o" productsK recyclables
– Dependence on +overnment ?nances in some "orm 7capital +rantsK annuitiesK tippin+ "ees etc&
– 6and and other support in"rastructure re)uirements could be )uanti?ed
– Fther proBect parameters are matters o" detail
• ssumin% 'e %et t.e above elements ri%.t6 'ill t.e proect (s) %o a.ea/
• Given t.e 5nancial situation (an lack of political 'ill in improvin% it)6 .o' can a creible investment environment be built6 '.ere man proects re?uire 5nancial support/
• Lots of @concernsA remain unans'ereBB
 
Ei+ Push >heory
• ation wide impactK e4ternalities – central scheme –  LnU1 lar+e corpus, based on re"orm a+enda
• :or the ?rst time, cities were "orced to thin o" an a++re+ate vision and investment plan
– Eut these were very lar+e numbers 7Ean+alore is at s& M0,000 *rores and the "und Wow is the proverbial drop in the ocean&
• 8owever, the structure seems to have a disincentive "or improvisin+ eVciencies , thou+h the obBective was to encoura+e it&
 
''
•  >a4 Euoyancy
• ProBect speci?cK +eneral purpose loans "rom bansK :.sK 16$s, securin+ municipal revenues
– 6oan conditionalityH #tate Government +uarantees
• Eond issues o" $hmedabad, 8yderabad, E1P, ashi, U.D:* etc&, have not led to lar+escale replication
– .ssues o" maret appetite, enduse
– 6imited number o" U6Es which can access ?nancin+ on a standalone basis
– #mall Npilots/ s& <0'00 *rores& normous amount o" eIort and arm twistin+ to close&
– Pooled :inance Nseems/ a more appropriate structure "or small U6Es
• o perceptible eIorts to levera+e
 
*ivic #ociety
Governmen t
PPPs in urban sector nee to be .bri moels
less focus on &ty#ology((more focus on tailored
solutions + results
• 4an back of assets
• vailabilit of funs for paments to private operator on a
• Fear of privatiation E
• Increase in tari3s
6ooin+ ahead, hope"ullyC
• *ities have coped reasonably well in the past –  >hou+h under immense stress now
– o reason why the problem cannot be addressed in the "uture
• PoliticalK #ocial realiXation o" imperative need "or improvement o" urban services
• Policies slowly  bein+ set in place
• 6ocal capacities improvin+
• PPP e4perience buildin+ up – emer+in+ models validatin+ proo" o" concept – arious precedents are bein+ tried and tested, and
e4perience is maturin+
 
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