Not many takers for PPP in urban services

Not many takers for PPP in urban services

New Delhi: Admitting slow pace of growth of public private partnership (PPP) in the urban sector, the Centre has said that there is a need to pursue this route more actively.

“The reasons behind the slow pace of growth of PPPs in urban sector is that these projects are extremely complex and require involvement of multiple agencies," said Urban Development Secretary M Ramachandran here while addressing a CII seminar.

“There is a perception that urban services such as water supply, solid waste management and sewerage are less attractive that other infrastructure like urban transport. This perception is largely driven by the inadequacy of user charges, thus far, to meet operating and maintenance expenses," he said.

Emphasising the need for PPPs, he said that private investment will bridge the financing gap and add to the viability of the projects. Airports, power projects and urban transport systems have found willing private investors.

Highlighting the role of urban local bodies (ULB) under Jawaharlal Nehry National Urban Renewal Mission (JNNURM), he said that while some ULBs are slow to plan PPPs, there are also a few who have taken a pro-active role in proposing projects on PPP model.

There are about 44 projects approved under JNNURM for PPP model. The projects involve solid waste management, bus rapid transport system, water supply and sewerage.

Pointing out a number of initiatives to encourage PPPs in urban sector, he said that there is a well defined framework for undertaking PPP projects.

The viability gap funding mechanism, and India Infrastructure Project Devleopment Fund are all designed to meet specific requirement of PPP projects.

Cities are bearing the brunt of rapid urbanisation and the city infrastructure has not kept pace with the growth.

“It is an accepted fact that government alone will be unable to meeting the infrastructure requirements, both in terms of financing the infrastructure and also in terms of meeting service delivery standards," Ramachandran said.

PPPs have now been widely accepted as a model which can augment the government’s infrastructure delivery capacity.

A PPP project involves sharing risks, roles and responsibilities between different stakeholders such as the private contractor, government and community.

However, pointing out the absence of any clear cut framework for regulation of PPP projects other than the concession agreement, Ramachandran said: “As multiple PPP projects are taken up in the urban areas, there will be an urgent need to evolve a regulatory framework that will deal with tariff setting and revisions, performance monitoring and adherence to service standards."

Government has undertaken initiatives to provide opportunity for urban local bodies to adopt innovative models under the PPP model.