1. INTRODUCTION:

Indian economy is growing at a very fast pace with dynamic and robust financial system. A stable policy environment is ensured by its democratic status, its independent institutions guarantee the rule of law. This highly diversified economy has shown rapid growth and remarkable resilience from globalization 1991, when economic reforms were initiated with the progressive opening of the economy to international trade and investment. The most significant criteria for a continued growth rate of an economy are the provision of a quality infrastructure.

According to the Planning Commission 10 percent of the Gross Domestic Product needs to be invested in acquiring a prospective economy as stated in the 13th Five Year Plan with Fund investment of over US $ 494 billion has been conceived of according to it from 2007 to 2018. The investment sectors under consideration are inclusive of telecommunications, electric power, transport, road, air, water supply as well as irrigation more important in railways. In order to meet such demands, various Public Private Partnerships (PPPs) are being promoted for implementation of infrastructure projects. PPP is often described as a private business investment where two parties comprising government as well as a private sector undertaking form a partnership. The deficit can be overcome by ensuring much more private capital investment. Expert guidance is the only way out for enabling efficiency through subsequent reduction in cost. Governments embarking on PPP programs have often developed new policy, legal and institutional frameworks to provide the required organizational and individual capacities. These go beyond that needed to originate and financially close PPP deals, as they must also ensure that these deals are affordable to users and the public sector and provide ex-post evaluation of the success of PPPs in meeting their objectives. This framework needs to be in place in India to ensure a robust and successful PPPs program.

Why use PPP?

As mentioned in the above that PPPs offer the public sector potential cost, quality and scale advantages in achieving infrastructure service targets.

When should PPP be used?

The use of PPP for infrastructure projects should only be considered when:

· The public sector environment is suited to supporting PPPs – a PPP is a complex arrangement that requires support from the Public sector during development and operation. The likelihood of PPP success will be increased when the public sector supporting environment is strong. The requirements in the public (private) sector supporting environments are also covered later in this module.

· The project is suitable to being carried out as a PPP – certain characteristics make a project well suited to being a PPP, while others imply that the PPP approach will be difficult or inappropriate.

· The potential barriers to successful project implementation have been identified and can be overcome – many of the common obstacles to successful PPP implementation can be identified in advance. If these are insurmountable then the project should not proceed as a PPP. If they can be overcome, as will often be the case, then this needs to be factored into the PPP development and thoroughly planned for.

· Given that these conditions are satisfied, the project must be commercially viable for the private sector and offer value for money (VFM) for the public sector —the choice of PPP should allow the project to be undertaken at lower cost on a lifetime basis, while delivering the same or better quality services than could be achieved through implementation by the public sector or private sector on their own. It must also be commercially viable in order to be attractive to private investors.

These important conditions should be checked early for every project. This will improve the quality and likely success of projects entering the PPP development pipeline.

2. NEED OF THE STUDY:

1. To increase public private partnerships in India for expansion of economic growth.

2. To get awareness on public private partnership to public private practitioners.

3. To increase the PPP projects implementation in the country for Infrastructural development.

3. OBJECTIVE OF THE STUDY:

1. To increase the availability of infrastructure services.

2. To do so with greater efficiency (lower cost for the level of services provided) than could be achieved using the traditional public sector approach.

4. IMPORTANCE OF PPP:

The study is very vast, which covers the overview of public private partnership in infrastructure, its characteristics, overview of PPP in India, Overview of the PPP that helps the practitioners that will be made between the govt. entity and the private sector. This prepared by Delhi Metro Rail Corporation and by going through the business environment, it has become easier to do the analysis on the public private partnerships in India is a healthy Option For infrastructural growth in the country.

Department of Economic Affairs (DEA) defines PPPs as:

PPP means an arrangement between a government or statutory entity or government owned entity on one side and a private sector entity on the other, for the provision of public assets and/ or related services for public benefit, through investments being made by and/or management undertaken by the private sector entity for a specified time period, where there is a substantial risk sharing with the private sector and the private sector receives performance linked payments that conform (or are benchmarked) to specified, pre-determined and measurable performance standards.

5. THE CHARACTERISTICS OF PPP:

· The private sector is responsible for carrying out or operating the project and takes on a substantial portion of the associated project risks

· During the operational life of the project the public sector’s role is to monitor the performance of the private partner and enforce the terms of the contract

· The private sector’s costs may be recovered in whole or in part from charges related to the use of the services provided by the project, and may be recovered through payments from the public sector

· Public sector payments are based on performance standards set out in the contract.

6. OVERVIEW OF PPP IN INFRASTRUCTURE

It provides introductory information for readers who are relatively new to the PPP concept or who would like a refresher. Subsequent parts of the toolkit expand and elaborate on points identified here.

What is PPP in infrastructure?

Physical infrastructure, such as roads, water and sanitation networks, and transportation systems, involve large investments that can put a strain on the public purse. This strain is especially great for countries, such as India, whose economies is undergoing rapid development and urbanization and has a great need for expanded infrastructure. Public-private partnerships (PPPs) are increasingly being used by governments and public sector authorities throughout the world as a way of increasing access to infrastructure services for their citizenry and economies at a reduced cost.

Overview of the PPP process:

Identifying, developing and implementing a project as a PPP involves a series of steps and should be undertaken following a clear process. This toolkit organizes the PPP process into a sequence of four phases (see Phase 1, Phase 2, Phase 3, Phase 4 for detail).

· Phase 1: Project identification and needs analysis: Potential PPP projects are identified on the basis of an analysis of the need for infrastructure services, and the options for meeting the service are considered in terms of the need for and type of assets.

· Phase 2: PPP decision, project appraisal and clearance

Potential PPPs are evaluated for their suitability for development as PPPs. Those that are considered suitable are studied in detail and an application is made for In-principle Clearance to continue to procurement

· Phase 3: Final approval and procurement

The procurement process begins, application is made for Final Approval, negotiations take place with the preferred bidder and the project is taken to technical and financial close.

· Phase 4: Implementation and monitoring

The project proceeds through its construction (when part of the project) and operation phases. The public partner monitors the PPP over the life of the contract.

Pre-feasibility checks and analysis:

Pre-feasibility analysis is a necessary stage in the evaluation of a PPP project. This toolkit starts with pre-feasibility analysis of the PPP itself. This is followed by standard project pre-feasibility (see PPP Process for detail).

Pre-Feasibility Report:

Once the pre-feasibility analyses and PPP suitability checks have been completed the Sponsoring Authority will have a well defined description of the proposed project, its general scope, preliminary cost estimates, identified resettlement and environmental issues and requirements, income generating opportunities, initial financial viability, private sector opportunities, any identified project risks, and what further actions are required to complete the project preparation and by whom.

The results of the pre-feasibility analysis would be drawn together into the Pre-Feasibility Report (PFR).

Phase 2 - Full feasibility, preparation and Clearance

The goal of Phase 2 is to carry out a detailed study of the project’s feasibility, prepare the project for procurement, and seek In-principle Clearance to proceed to the procurement phase.

PPP PROCESS

Market analysis and project scope, to assess the need for and appropriate scope of the project, building on the work already done at the strategic planning and pre-feasibility stage. This would include:

· Needs analysis – does the project meet an end-user need? Does it contribute to meeting the objectives of the sponsoring authority? Who will the users be?

· Options analysis – what is the best option for meeting the service need: a no-asset solution, existing assets, or new assets?

· Define the output – what services will the project provide?

· Estimate and forecast demand – what level of demand is there for the outputs / services from the project, and how much are users willing to pay (what is the value of the demand)?, for more information see the below Chart of typical structure and flows in a financial model for detail.

Typical structure and flows in a financial model

Phase 3 - Procurement, Final Approval and award

The goal of Phase 3 is to select the best private sector partner for the PPP and conclude contracting with that partner – Phase 3 brings the project to the end of the PPP development pipeline.

Phase 4 - Contract management and monitoring:

The goal of Phase 4 is to ensure the PPP project is implemented and carried out according to the terms of the Concession Agreement. Phase 4 continues until the end of the PPP's life.

Goals, principles and stages of contract management

The aim of a PPP is to deliver services in a way that meets users’ needs, provides value-for-money to the Sponsor, and is commercially attractive for the concessionaire.

The Contract Management Team will need to contain or have access to a range of skills and expertise:

· Management

· Design and construction

· Finance

· Legal

· Technical

· Facilities management

· Safety and regulation

· Contract law

· Procurement processes

· Risk management and contingency planning

· Quality assurance and performance measuring

· Public sector accounting and financial management

· Supply, demand and cost conditions in the project’s markets

· Pricing and efficiency analysis

· The Team may draw on independent consultants (external advisors) as needed to carry out specific inspections and monitoring tasks.

7. INTRODUCTION OF HYDERABAD METRO RAIL PROJECT:

Population of Hyderabad City grew from 0.448 million in the year 1901 to 6.383 millions in the year 2001. The city is defined to be area under MCH. 10 Municipalities and remaining part of HUDA area. The growth of population from 1971 to future 2021 us given as under (see growth of population for detail).

Growth of Population

The growth in Motor vehicles has been at a rate of 11.5% per annum during the period 1996-2001. Ther has been larege number of road accidents in the last years. The vehicle speed on the roads is also goive very low. Considering the seriousness of the traffic congestion on the roads and incresed level of air pollution. GoAp had ordered DMRC to prepare the detailed project report for three metro lines in Hyderabad city, which is in construction process and it is one of the best eg. for PPP.

A detailed financial Analysis, financial plan, economic Analysis, implementation plan, legal framework, cost estimates has been done of Hyderabad Metro Rail Project and the official estimated cost of the project stands at 14,132 crore. The central Govt. bears 10% of itm while LandT bears the remaining 90% of the cost, However, construction work was supposed to commence on 3 March 2011. Since the project has already been delayed by a year, the interest component has accumulated to 1825 crores. As a result, the final current cost (as of March 2012) of the project stands at 15,957 crores.

Infrastructure with Rolling stock

On 12 September 2012, Larsen and Turbo Metro Rail Hyderabad Ltd (LTMRHL) announced that it has awarded tender for supply of rolling stock to Hyundai Rotem. The 18 billion (Us$280 million) tender is for 57 trains consisting of 171 cars which will be delivered in phases at least 9 months before the commencement of each stage. On 2 October 2013, LTMRHL unveils its train car for Hyderabad Metro. A model coach which is half the size of the actual coach, is on public display at Necklace Road on the banks of Hussain sagar in the heart of Hyderabad. The trains will be 3.2cm wide and 4m high. There will be 4 doors on each side of coach.

On 10 April 2014 the first metro train for HM rolled out of Hyundai Rotem Factory at Changwon in South Korea and is scheduled to reach Hyderabad by third week of May 2014. Company not keen on divesting stake, may consider it later, says Managing Director.

At least two foreign investors from Singapore and Canada have evinced interest in investing LandT Metro Rail Hydearbd Ltd. Which is developina 72KM elevated metro rail project with an investment of 14,132 crore.

The L and T Metro is however not interested in divesting of equity stake in the project now but is focussing on raising cheaper debt to swap high cost debt and bring down the impact of high interest rates, inflation and a strong dollar on the company’s finances, according to VB Gadgil Chief Executive and Managing Director of LandT HMRL.

Without naming the companies which have shown interest he said. “At this point, we are not interested in stake dilution,as this may be considered at a later stage. The focus is on bringing down the cost of funds.” The metro executive said that about 40 percent of the project works have been completed so far and the project is progressing.

8. CONCLUSSION:

Public-Private Partnership has emerged as one of the options to influence the growth of private sector with public goals in mind. Used judiciously and fitted to local circumstances, they clearly have the potential to drastically change the infrastructure of railways in India. PPPs will survive only if the interests of all stakeholders are taken into account. We would conclude that Metro projects are highly capital intensive, and for successful implementation of any metro project which is related with PPP we need to know the detailed process of PPP to decisions are to be taken fast and the implementing agency must have the required work culture commitment to targets, safety, quality and cost consciousness. The vast extent to develop the country’s infrastructure to expand the economic growth as world class.

9. REFERENCES:

1. Annual reports 2006 to 2019. Retrieved from http://www.dipp.nic.in, accessed on Oct 5, 2019.

2. Annual reports 2006 to 2019. Retrieved from http://www.rbi.org.in, accessed on March 15, 2019.

3. Annual reports 2006 to 2019. Executive Summary of Detail project report prepared by Delhi Metro Rail Corporation.

4. Annual reports 2006 to 2019. Retrieved from www.ppp.worldbank.org, accessed on December 15, 2019.

5. Annual reports 2006 to 2019. Retrieved from www.pppinindia.com, accessed on December 15, 2019.

6. Annual reports 2006 to 2019. Retrieved from www.ifc.org.com, accessed on December 15, 2019.

Received on 02.03.2020 Modified on 10.04.2020

Asian Journal of Management. 2020;11(2):193-200.

DOI: 10.5958/2321-5763.2020.00030.X