Question

Consider the following with respect to the concerns in PPP models

1. Model concessionnaire agreements provide less scope for renegotiations
2. Financing models are inadequate
3. Long time needed for dispute resolution

Which of the above statements are correct

• A. 1 and 3
• B. 1 and 2
• C. 2 and 3
• D. 1,2 and 3

Answer 1

The correct option is D 1,2 and 3

Issues with PPP:

- Problems with MCA: Existing contracts focus more on financial returns than providing services. It neglects principle of allocating risk to entities in the best position to manage it. There are no ex-ante provisions for re-negotiations. Contacts are over-dependent on market wisdom.

- Financing: The NPAs in infrastructure projects have increased. The present system of financing has become unviable.

- Dispute resolution: The infrastructure projects are fraught with disputes leading to long resolution process (3 to 10 years according to a survey). The number of disputes of PPP projects have gone up from 56 in 2013 (worth Rs 803 cr) to 116 in 2015 (worth Rs 11580 cr).

- Tardy implementation by Government in areas such as land acquisition and environmental clearances.

- Trust deficit between the government and the private partner.