The newer and innovative career opportunities for the skilled manpower are on rise in the corporate sector. The knowledge about the latest trends in corporate sector and the emerging issues in management practices would put you in an advantageous situation to get selected for the desired career opportunities. The understanding of concept of Public Private Participation (PPP) Project and its role in development of infrastructure in Indian economy should be known to the aspirants preparing for various competitive examinations as well as for the preparation of corporate interviews. The development of highways in India by NHAI in a ‘mission mode’ as well as the increasing scope of PPP projects in health, education and other sectors of economy mandates the knowledge of PPP concept to every educated and responsible citizen of India. This article tries to throw light on the concept of PPP projects, its types, advantages & disadvantages and its scope for future development.

Public Private Participation (PPP) project is an arrangement between the Government entity and the Private sector entity over a period of time. It is not a mere outsourcing of functions by the Government to the private sector or it is also not the donation by a private party for a public good. The scope of PPP projects is very wide. PPP is a contract between public and private sector entity for the provision of public assets or public services, through investments made by the private sector entity, for a specified period of time, where there is well defined allocation of risk between the private sector and public sector. In a market economy, there are certain positives and negatives associated with the public sector as well as private sector.

The PPP model offers a win-win situation for both public sector as well as private sector, where in the capital infusion and technical expertise component is contributed by the private sector and in lieu it receives the performance linked pay of the work or services provided. The private sector partner in PPP project participates in designing, completing, implementing and funding the project whereas the public sector partner focuses on defining and monitoring the compliance with the objectives. Risks associated with the PPP project are distributed between the public and private partners according to the ability of each partner to assess, control and cope with them. The requirement of infrastructure development in Indian economy along with the provision of quality public services are being fulfilled through various PPP projects, by efficient and effective utilisation of resources.

Public-private partnerships (PPPs) can take a wide range of forms varying in the degree of purpose, involvement of the private entity, legal structure and the risk sharing. There are different models of PPP to allow different levels of private sector participation. There is a type of PPP where the private sector builds, develops, operates and manages an asset and does not transfer the ownership to the government. The schemes are referred as: Build – own – operate (BOO); Design – construct- manage – finance (DCMF); Build – Develop – Operate (BDO). The other type of PPP project includes the projects where the private sector buys an existing asset from the Government and renovates, expands and then operates the asset without transferring ownership to the Government. The variants under this model are: Buy- Build- Operate (BBO); Lease – Develop – Operate (LDO); Wrap – Around – Addition (WAA). Lastly, in few of the PPP projects, the private sector designs and builds an asset, operates it and then transfers it to the government after the contract period ends. The asset is rented or leased to the private sector by the Government. The variants include: Build- Operate- Transfer (BOT); Build – Rent – Own – Transfer (BROT) ; Build – Own – Operate – Transfer (BOOT) ; Build –Transfer- Operate (BTO) and Build – lease – operate – transfer (BLOT).

There are numerous advantages associated with the PPP projects. Private-sector technology and innovation help provide better public services through improved operational efficiency. The public sector provides incentives for the private sector to deliver projects on time and within approved budget. In addition, creating economic diversification makes the country more competitive in facilitating its infrastructure base and boosting associated construction, equipment, support services and other businesses. The other side of advantages of PPP projects consist of various risks associated with PPP model. Projects for development of physical infrastructure such as roads or railways involve construction risks.

If the product is not delivered on time, it exceeds cost estimates or has technical flaws , the private partner typically bears this burden. The private partner also faces availability risk if it cannot provide the service promised. For example, the company may not meet safety or other relevant quality standards when running a prison, hospital or school. The Demand risk occurs when there are fewer users than expected for the service or infrastructure, such as toll roads, bridges or tunnels. Over the past few years, various PPP projects across various sectors in India have been in a stalled state due to various reasons. Some of the important reasons for delay in completion of PPP projects include – over-leveraging i.e. bidding beyond capacity and expecting Government to redraw contracts; inherent flaws in the design of projects; lack of adequate funds for long term projects; various clearance issues by the Government authorities for various projects including environment clearances, land acquisition issues and so on.

India offers today the world’s largest market for PPP projects. It has accumulated a wealth of experience in getting to this premiere position. As the PPP market in infrastructure matures in India, new challenges and opportunities have emerged and will continue to emerge. The newer versions of PPP like Swiss model of investment or Hybrid annuity model are contributing in the growth story of Indian economy. There exists a significant untapped potential for the use of the PPP model in e-governance, health and education sectors. At the central level, the National Highway Authority of India (NHAI) is the leading user of the PPP model. NHAI is successfully chasing the target of building 40 km per day construction of new roads by the method of PPP in year 2017-18. Considering the success of PPP model in India, there is no doubt that the increasing scope of PPP modality would show the path for future development of modern Indian economy.

(The author of this article , Lt Col (Dr) Satish Dhage, is an ex Army officer and has been qualified for IPS (Indian Police Services) through IPS LCE 2012. Presently, he is Director, MGM Institute of Competitive Exams Aurangabad. For any queries or feedback, he can be contacted on email id : drsatishdhage@gmail.com)