Economic Research institute for ASEAN and East Asia (ERIA)PPP Framework WorkshopByAdil ZaidiAssociate Director, Government & Transaction Advisory Services Ernst & Young Pvt Ltd, India PPP Framework update arc!, "#$" Page " Agenda$% Introduction to PPP in India"% Institutional &rame'or()Institutional structure &or a**roval o& PPP *ro+ects)Time re,uired &or a**roval o& *ro+ects)easures to strengt!en im*lementation ca*acity-% .!allenges to /e addressed0% Initiatives under consideration to cataly1e PPP *ro+ects2% Summary o& en!ancement o& PPP institutional &rame'or(3% .ase studies4% .oncluding remar(s arc!, "#$" Page - )India at *resent s*ends around 2 5 36 o& t!e GDP on in&rastructure develo*ment, /ut aims to increase investments to 76 o& t!e GDP /y"#$0)Signi&icant unta**ed *otential in e8governance, !ealt! & education sectors)InordertoensurePPP modelsucceedsandattract*rivateinvestors,Govt%o&India !asdevelo*edvarious*olicies&regulatory&rame'or(saddressingrationalris( allocation /et'een Pu/lic and Private sectorSource: Various database, as of July 2011Less than S! "# mi$$ion%etween S! "# mi$$ion to S! mi$$ion %etween mi$$ion to '## mi$$ion(ore than '## mi$$ionInfrastructure pro)ision in India * +he stor, so far-.arc!, "#$" Page 0 PPP the preferred mode for infrastructure pro)ision)Government o& India, !as envisaged t!at a/out 2# *ercent o& in&rastructure investmentint!ecountryduringt!e$"t!&iveyear*lan9"#$"5"#$4:'ill come &rom *rivate sector *rimarily t!roug! PPP route+ota$ estimated in)estment in infrastructure /, Pu/$ic 0 Pri)ate Sector during "#'" * "#'1 2 S! '3#"# /i$$ion$#t! *lan 9actual: $$t! *lan 9estimated: $"t! *lan 9*ro+ected:#"##0##3##;##$###$"##$-;"3"2$#02$072$#Private investment Pu/lic investmentInfrastructure investments across various five year plan (in USD billion)Institutiona$ frameworkarc!, "#$" Page 3 )Pro+ect A**raisal Division, under Planning .ommission *rovides inde*endent a**raisalo&t!e*ro+ects'!ic!is&ollo'ed/ya**rovalo&t!e.a/inet .ommittee on Economic A&&airs 9..EA:)..EA!assetu*adedicatedcommitteenamedasPu/licPrivate Partners!i*A**raisal.ommittee9PPPA.:toeor a**raisal o& PPP *ro+ects o& all sectors o& cost greater t!an @SD "# million /ut less t!an @SD 2# million>or a**raisal o& *ro+ects costing less t!an @SD "# millionPro5ect 6ostAppraisa$ agenc,@*to @SD $ millionCelevant ministry@SD $ million /ut less t!an @SD 2 millionStanding >inance .ommittee 9S>.:% @SD 2 million and a/ove /ut less t!an @SD "# millionEinance .ommittee 9E>.:Institutiona$ structure for appro)a$ of PPP pro5ectsAdministrati)e (inistr,PPPA6Administrati)e (inistr,SF66ommitteeAdministrati)e (inistr,SF6 7 EF6arc!, "#$" Page ; Stage Time Line$% Tec!nical &easi/ility study and its a**roval0 to 3 mont!s"% A**roval o& *ro+ect structure and /id *arameter $ mont!-% Pre*aration o& dra&t /id documents com*rising o& C>D, C>P and .oncession Agreement$ mont!0% In8 *rinci*le and &inal a**roval /y Pu/lic Private Partners!i* A**raisal .ommittee9PPPA.: $%2 mont!s to "%2 mont!s 9i& t!e documents are /ased on model documents, it may ta(e $%2 mont!s, else u* to "%2 mont!s:2% Invitation o& t!e C>D and s!ort listing $%2 to " mont!s3% Invitation o& t!e C>P and issue o& letter o& a'ard " to "%2 mont!s4% Signing o& t!e .oncession Agreement $ mont!;% >inancial closure @* to 3 mont!s+ime re8uired for procurement process for PPP pro5ects)PPP *rocurement *rocess in India varies /ased on t!e *ro+ect si1e and t!e sector 8larger and com*le< *ro+ects ta(e more time as com*ared to smaller *ro+ects)Based on t!e trends so &ar, t!e a**roval time can vary &rom one year to t'o and !al& yearsarc!, "#$" Page 7 (easures to strengthen imp$ementation capacit, ).a*acity Building)Esta/lis!ed "2 PPP cells in state and national government de*artments)Aodal agencies at state and national level)Trainingand(no'ledges!aring'or(s!o*sacrossvariousde*artments'it!ADB assistance)Cegulation)Inde*endent Cegulatory Aut!ority in most o& t!e sectors= )Air*ort Economic Cegulatory Aut!ority 9AECA:, )Tari&& Aut!ority &or a+or Ports 9TAP:, )Telecom Cegulatory Aut!ority o& India 9TCAI:, ).entral Electricity Cegulatory .ommission 9.EC.: etcarc!, "#$" Page $# (easures to strengthen imp$ementation capacit, (contd-.) )Develo*ing s!el& o& *ro+ects and &acilitating &inancing )Eia/ility Ga* >unding 9EG>: sc!eme)India In&rastructure >inance .om*any Limited 9II>.L:)India In&rastructure Pro+ect Develo*ment >und 9IIPD>:)Standard transaction documents &or eac! sector)Pre*aringmodel &ormats &or C>D, C>P, .oncession Agreement)Increasing Su/8national government involvement)State Su**ort Agreement &or getting state involved)Su/8national governments to &und a *art o& EG> in some casesarc!, "#$" Page $$ 6ha$$enges to /e addressed)In order to attract more domestic and international *rivate &unding in Indian In&rastructure, a more ro/ust regulatory environment, 'it! an Inde*endent Cegulator is essentialA/sence of independent regu$ator)An online data /ase consisting o& all t!e *ro+ect documents including &easi/ility re*orts , concession agreements and status 'ill /e !el*&ul to all StateF.entral govt% de*artments to ta(e lessonsLack of proper information for State 9o)ernment and $oca$ /odies)T!e limited Institutional ca*acity to underta(e large and com*le< *ro+ects at various .entral ministries and more im*ortantly at State and Local /odies level, !inder t!e translation o& targets into *ro+ects% Lack of Institutiona$ 6apacit, arc!, "#$" Page $" )T!e Pro+ect develo*ment activities vi1, detailed &easi/ility, land ac,uisition, environmentalF&orest clearances etc are not given ade,uate im*ortance /y t!e .oncessioning Aut!orities% )T!e a/sence o& ade,uate *ro+ect develo*ment /y aut!orities leads to lesser interest /y Private sector, mis*ricing and successive delays at t!e time o& erame'or( Legal Ena/lersSector Po$iciesE