Question

Q. Consider the following statements about Public Private Partnership (PPP) models:

Which of the above given statements is /are incorrect?

• A.
  1 only
• B.
  2 only
• C.
  Both 1 and 2
• D.
  Neither 1 nor 2

Answer 1

The correct option is B

2 only
Explanation:

Statement 1 is correct: Under the Engineering Procurement and construction (EPC) Model, the government bears the complete cost of the project. In this model there is a huge financial burden on the government. In this mode of PPP, Bids are invited by the government, for engineering knowledge from the private players. Procurement of raw material and construction costs are met by the government while the private sector’s participation is minimum-limited only to the provision of engineering or technical expertise and construction.

Statement 2 is Incorrect: Under the Build-Operate-Transfer (BOT) toll, a road developer constructs the road and he is allowed to recover his investment through toll collection. The collection of toll will be for a longer period which is about 30 years in most cases. There is no government payment to the developer as he earns his money invested from tolls.

The above mentioned statement relates to the BOT-ANNUITY model, where the developer builds a highway, transfers it back to the government after operating it for some time. The government starts payment to the developer after the project is commercially launched.