Introduction

International Experiences

Experiences of some selected countries in the adoption of PPP approach are explained briefly in this section.  It is noted that the forms of PPPs differ from country to country to and sector to sector depending on the circumstances that they confront and political and administrative structures that they adopt.

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  Bangaladesh
  

The Government of Bungaladesh has given priority for adopting PPP approach in key infrastructure sectors and policies and guidelines have been developed securing the rights of the public and private agencies and institutions with regard to investments that they are expected to make.  The Private Infrastructure Committee (PICOM) which comes under the purview of Prime Minister’s office is mainly responsible for co-co-ordinating the PPP projects with the relevant agencies.  The Ministry of Finance in Bangaladesh has taken some measures to support PPP initiatives and they mainly include.

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  Reform of guidelines and institutional framework.
  
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  Establish a separate unit of PPP for budget formulation and implementation.
  
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  Make budgetary allocations annually for implementation of PPP projects.
  
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  Introduce tax incentives for PPP investors.
  
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  Increase publicity for the new PPP projects.
  

PPP investors are invited to embark on joint ventures in the areas of power, sea port, airport, telecommunication, energy and bridges.  These investors are facilitated by the special agencies established under the public domain namely Infrastructure Development Company Ltd. and Infrastructure Investment Felicitation Centre.  Their services mainly include providing finances and financial intermediation services, formulating project proposals, giving technical assistance and appraisal of project proposals.

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  India
  

India has accepted the policy of obtaining private capital through PPP arrangements particularly, for infrastructure development projects at both national and regional level.  Being a geographically large and federal state, all states provinces have developed their own policies and strategies to attract foreign investments by way of PPPs with a view to filling the investment gaps resulted from low savings in state economies. At national level, the Government has set up a “Viability Gap Fund” (VGF) with a view to ensuring enhanced access to PPP in infrastructure development by subsidizing the capital cost of access.  Hence, the objective of the VGF is to meet the funding gap required to make economically essential projects that are commercially viable.  The VGF has been operating since 2006 and to date 15 projects have been given approval for implementation. Karnataka State has taken measures to implement an Urban Water Supply Improvement Project through “Management Contract” which is one of the PPP models.  While ownership of the existing and rehabilitated assests is kept with the relevant Urban Local Body, the responsibility of management has been contracted out to a private company for a period of three years.  The private operator has been entrusted with the responsibilities of providing service connections, supplying treated water, ensuring reduction of distribution losses and collecting revenue through water bills.  As per the commercial agreement, the private operator is eligible for receiving fees (60% of the fixed component and 40% of the variable component)  based on fulfilling the performance targets.  Further, additional sums are provided for the achievement of targets beyond a set level.  In case, there is a violation of the conditions spelt out in the agreement, the contract is liable to be terminated.

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