We Have Saved Indian Bankers From 3 Lakh Crore Infrastructure NPAs: Nitin Gadkari
With the mission of revitalising Public Private Partnership (PPP) infrastructure models, the Minister for Road Transport, Highways and Shipping, Government of India, Nitin Gadkari said how PPP models in infrastructure could be made successful only when bankers as stakeholders, investors contractors and government sit together to create a sustainable model agreement.
"PPP is the need of the hour given the budgetary constraints of the government. It was imperative that the stakeholders including the government, private sector, investors and banks work in tandem and weed out the obstacles and create a Model Concession Agreement (MCA) which accounts for all the risks, issues and spells out a framework for effective implementation of a PPP", said Gadkari at the India PPP Summit organised by FICCI in New Delhi.
Speaking in the context of the projects taken up by the previous government, the minister mentions how the government has terminated thousands of projects that were on the verge of becoming Non Performing assets (NPAs).
"We have terminated projects worth 50,000 crore taken up by the previous government and with holistic solutions, have saved the Indian bankers three lacks crore infra NPAs", said the minister, blaming the contractors and investors for the NPA pile up, who undertook the projects without the required arrangements.
He elaborated the need of making public transport a priority and bringing together an efficient system for smooth movement of people via public transport across states and within cities. Public transport running on biofuel and electricity is the focus of the government as it would be environment friendly and cost effective. He added that bus ports are on the anvil, which would be on the lines of airports offering world-class amenities.
The study released by FICCI and EY-'Revival of PPP momentum in the transport sector', underlines the need to resolve multiple issues dampening the private sector interest and slowing the rate of private investment in the sector.
"PPPs today face a plethora of challenges including lending constraints, lack of equity in the market, poor project preparation activities and absence of dedicated policy or regulation. The government in the Union Budget 2014-15 has proposed to set up an institution to provide support to mainstreaming PPPs called 3P India with a sum of Rs 500 crore. Not much progress toward a dedicated institution has been observed till now; nonetheless, there is an urgent need to set up 3P India', mentions the report.
Apart from a dedicated institution, the report pitches for a strict check on the aggressive bidding behaviour of the developers to bag infrastructure projects.
"Of late, many PPP projects in roads and ports sector have witnessed aggressive bidding. Today, authorities lack the capacity to assess whether a particular bid is aggressive or not. Hence, it is recommended that the government develop a framework that would enable authorities to analyze the lowest bid with respect to internal estimates. They should be able to decide the range of variation, i.e., the upper and lower limit of variation in bidding parameter (total project cost, revenue share, annuity etc.) to check aggressive bidding", elaborated the report.
