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NEWS  EDITORIAL

Empowering the private sector

EM news bureau ,  Wednesday, January 13, 2016, 12:35 Hrs  [IST]

What was certainly a disconcerting observation during 2015 was the falling level of private sector enterprise in infrastructure sector, including power. The year was punctuated with disturbing examples of India’s stellar infrastructure developers now saddled with debt and on course to selling their assets to disburden their balance sheets. Leading names like Jaypee, Reliance Infra, Lanco, IVRCL, GMR, etc are, in various degrees, planning to exit some of their infrastructure business through a strategic sale of their assets. With the bigger boys reworking their agenda, smaller potential private sector developers are naturally circumspect of stepping in. What is now needed is a serious rethink on the PPP philosophy.

In the past decade or so, the PPP model was lapped up by leading developers across all major infrastructure segments. Concession agreements for 25-30 years were entered into. However, it is only now that the government is realizing that assumptions made at the onset of the concession period need not hold for as long as 25-30 years. Hence, there should be, as the government now realizes, a clean mechanism that helps the developer exit the project after it is in operation for a certain number of years. The Kelkar Committee on PPP whose report was recently made public address this issue amongst its several recommendations.

The national highway sector has taken positive steps in this regard. Two key policy changes announced during the year have been allowing concessionaires to exit their projects after two years of operation, and introduction of the hybrid model where the government shares some percentage of the project cost.

India’s infrastructure goals depend on the success of the PPP model. By itself, the government will be unable to bring in the efficiency that comes naturally to the private sector. There should therefore be every effort on part of the government to safeguard private sector interest, especially when projects get impeded by factors beyond the control of the private developer. In this respect too, policy changes are being noticed in the national highways sector. Other sectors like power, seaports, airports, railways, etc should toe the line and rework their PPP policies with due fairness to the private developer.

An empowered private sector is the sheet anchor of India’s infrastructure aspirations.

 
                 
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