R.P. Singh, Chairman, National Highways Authority of India, has blamed project handlers for the perceived failure of infrastructure projects under the public-private partnership model. He said the onus for the failure rested on people who handled the projects rather than the concept of PPP and pointed towards the dismal infrastructure situation in the country and called for substantial injection of funds to create assets.
“The infrastructure situation in the country is dismal; the pace of investment is sub-optimal and unless we come out of the subsidy regime and inject substantially more funds into capital expenditure for asset creation, the situation will not look up,” Singh said while addressing the India Infrastructure Summit 2014, which was organised by the Federation of Indian Chambers of Commerce and Industry in New Delhi on September 23.
Singh underlined the need for a rational tolling policy that was fair to the road user and did not charge disproportionately higher in relation to the distance actually travelled.
With regard to PPP projects, he said most of the problems were caused due to aggressive bidding by the developers. He added that there was a tendency to pass on the risk to the government whenever a project became unviable.
The solution, Singh stressed, lied in total transparency in PPP projects.
There were also problems with interpretation of the Model Concession Agreement, he said, adding that the bureaucracy had the tendency to look for government-centric interpretation of clauses in the MCA to the detriment of the private sector.
Singh emphasized that given the long duration of such contracts, there was need for constant interpretation and stability.
Another major problem, he said, was with regard to selection of projects since no study had ever been done by any agency on the optimal road grid required. Such decisions were not taken with care and there was a tendency to go on declaring roads as national highways, he added.
Singh said PPP was the preferred mode for execution of projects in the absence of adequate funds.
Speaking at the event, Shipping Secretary Dr. Vishwapati Trivedi said PPP by itself was not a bad concept.
“If you have the money go for engineering, procurement and construction contracts or else build roads through the PPP mode,” he said.
On the issue of interpretation of the MCA document, Trivedi said that some projects had gone awry even in the port sector. There were cases in dispute resolution where arbitrators had completely reversed the revenue-sharing document against the interests of the developers, he added.