Ownership Of PPP Infrastructure Development Projects.
As a part of (PPP) Public Private Partnership in infrastructure development, BOOT (Build Own Operate and Transfer) and BOLT (Build Operate Lease and Transfer) projects are playing a vital role in the world and India too. Many projects under BOOT form are successfully implemented in many countries. In India many infrastructure development projects are formed under BOOT model. It was identified that “user pay” instruments like water tax, conservancy tax, sewerage tax, fines for dumping waste, toll tax, user charge, advertising rights etc will motivate the BOOT models of infrastructure projects in Water supply, Sewerage, Solid waste, Roads, Flyovers, Bridges, Airports, Railway stations, Bus Terminals etc.
Normally Boot projects have thirty years of license and asset will be transferred free of cost at the end of the license period. In India the Gujarat maritime Board identified 10 green field sites as direct berthing deep draft ports on a BOOT basis, Andhra Government and Orissa Government also proposed many project under BOOT.
In India the Tamil Nadu Government made an agreement with Larson and Tubro to construct a 28 Km long two lane Coimbatore bypass road. This would help to save 2.5 Km travel, fuel and traffic free flow. The project was completed at a cost of 1.04 bn and bypass started operative from Jan 19, 2000. It was maintained with all facilities including drinking water, petrol bunk and 24 hours ambulance service. As per the agreement the L & T started collecting Toll charges, which was the only revenue to recover the project price.The users of the bypass road refused to pay the toll charges and L&T faced a financial crisis in repayment of the loan amount to their funding agency. Even the Tamil Nadu Government had dues in toll charges. The only user’s instrument for L & T to recover the project price is toll charges. They were not in a position to collect the accumulated dues.
The beneficiaries must realize the primeneed of the infrastructure development. The core beneficiaries are the local people and tress- passers. They must be aware of its explicit and implied value addition to their growth and development. The infrastructure forms a wide network of services in the economic development of that location. In an infrastructure project general public in that locality and the tress passers are the real equity holders. They are the long-term beneficiaries of the infrastructure development projects. The users of such facilities should realize that infrastructure development companies are professional service contractors and beneficiaries are the permanent equity holders of such projects. The users and local dwellers should not hesitate to sacrifice a small amount of their income to user instruments, as it facilitates more convenience for their mobility.
While developing the BOOT or BOLT projects the Government and the project company must consider the per capita income and standard of living of the local population, the potential growth gained after implementing the project in that region etc. The crucial deciding factor must be the probable marginal benefit, which could be derived from the project. The probable marginal benefit must yield a realistic and reasonable service with in a comfortable period of time. If the beneficiaries are the deprived and economically weaker section the government must come forward to share the project price. The government can think of combining the local municipalities and District Central Cooperative Banks to share the project price of the proposed infrastructure development project in those localities. The value and span of the network of such services must be the central theme of any BOOT project. Such values naturally stimulate the minds of the beneficiaries (users). The beneficiaries also should feel that the private capital involved in such infrastructure projects is the debt capital of the users and it is obligatory on the part of the stakeholders to redeem the debt and a comfortable premium within a reasonable span of time. The stakeholder’s cooperation ensures the infrastructure project promoting companies that there is no commercial risk. The project companies recover the project price from user charges paid by the stakeholders.
The success of the infrastructure project is purely based on the stakeholder’s attitude. The stakeholders must take the ownership in helping the project companies to recoup the project price in the form user charges. If the beneficiaries do not realize their capacity in such projects it would be a “sick in seed” for the grooming new BOOT projects in India for developing the infrastructure. Many BOOT projects in India are struggling to find a comfortable solution in mitigating the commercial risk. The project companies should analyze ” the duration and user instrument” to recover the project price not only in the light of BCR (Benefit Cost Ratio) and IRR (Internal Rate Of Return) but also the affordability of the beneficiaries. The most viable technique of mitigating the commercial risk is creating the ownership among the beneficiaries. This will result in gaining the co-operation of the beneficiaries to give the ‘user charge’ voluntarily and enthusiastically.
The Public Private Partnership infrastructure projects should create awareness about the public responsibility over the projects. The public should also hold the ownership both in executing the projects and settling the project price. It will facilitate more companies to come forward to undertake the infrastructure projects in India. The “Stake holders” (beneficiaries) become the “Equity holders” (owners) of such infrastructure projects.