Rajasthan: Public Private Partnership(PPP) for Economic Transformation

ppp

India has systematically rolled out a Public Private Partnership (PPP) program for the delivery of high-priority public utilities and infrastructure. With close to 1300 PPP projects in various stages of implementation, according to the World Bank, India is one of the leading countries in terms of readiness for PPPs.

What is Public Private Partnership (PPP) ?

Public Private Partnership (PPP) model involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project.

Various advantages associated with PPP approach:

  • The emergence of Public-Private Partnerships (PPPs) is seen as a sustainable financing and institutional mechanism with the potential of bridging the infrastructure gap.
  • Apart from enabling private investment flows, PPPs also deliver efficiency gains and enhanced impact of the investments.
  • The efficient use of resources, availability of modern technology, better project design and implementation, and improved operations combine to deliver efficiency and effectiveness gains which are not readily produced in a public sector project.
  • PPP projects also lead to faster implementation, reduced lifecycle costs, and optimal risk allocation.
  • Private management also increases accountability and incentivizes performance and maintenance of required service standards.
  • Finally, PPPs result in improved delivery of public services and promote public sector reforms.

Various models of PPP in India:

ppp-models

What is Rajasthan’s PPP model ?

The Rajasthan’s PPP model does not restrict private players to merely building roads and bridges, but allows them to take control of the services and social sectors. It pushes for privatization in even those government sectors hitherto forbidden to the private sector. Rajasthan Government has broken the monopoly of the government sector in transportation, power distribution, public distribution schemes (PDS), health and education. Hence, in Rajasthan, PPP  is being used both for building infrastructure as well as for improving the provision of services.

Institutional Mechanism for PPP in Rajasthan:

A three-tier institutional mechanism has already been established in the Rajasthan:

  • Empowered Committee on Infrastructure Development (ECID), headed by the Chief Secretary, to approve the project to be implemented on PPP format.
  • PPP Cell, under the direct supervision of the Principal Secretary, Planning Department, who is the State PPP Nodal Officer, acts as the Nodal Agency to coordinate and monitor the PPP projects. This Cell serves as the secretariat of the ECID and being strengthened to support departments in project development, appraisal and evaluation. This Cell provides all hand-holding support for development of these projects.
  • Implementing Agencies – the respective administrative departments/agencies to identify, develop and execute the PPP projects. Respective administrative departments have nominated one of the officers as nodal officer for PPP projects.

Funds for PPP projects in Rajasthan:

RIPDF:

  • A new fund titled “Rajasthan Infrastructure Project Development Fund” (RIPDF) has been created with an initial corpus of Rs. 25 crore for supporting the development of credible and bankable PPP projects that can be offered to the private sector and the other infrastructure projects wherein Government of Rajasthan reimburses project development expenses.

VGF:

  • For projects that not financially viable, Rajasthan government has incorporated Viability Gap Funding (VGF) mechanism.  Viability Gap Support in the form of capital subsidy,  interest free or concessional loan, land free of cost or at concessional price etc.

IIPDF:

  • The Government of India provides financial assistance for the Project under the India Infrastructure Project Development Fund (IIPDF) for Project Development entailing project structuring, financial modeling, bid documents preparation, bidding process assistance, etc.

Capacity Building for PPP:

Rajasthan is one of the States selected under the National PPP Capacity Building Programme (NPCBP) launched by Department of Economic Affairs, Ministry of Finance, Government of India in 2010 with support of KfW (German Development Bank) and the World Bank.

Rajasthan is a participant State with the Department of Economic Affairs (DEA) of Government of India under the Technical Assistance Project of Asian Development Bank (ADB), namely, “Deepening Capacity Building for Mainstreaming Public Private Partnership”. Advisory technical assistance of two experts is available to the State Government to enhance capacity of State PPP cell to prepare, evaluate, and appraise PPPs in infrastructure and significantly improve monitoring of overall progress in PPPs through databases.

Sectors where PPP model has been introduced:

Roads Sector:

  • Rajasthan was the first State to formulate a policy for Build-OperateTransfer (BOT) projects in 1994. The Rajasthan Road Development Act, 2002, encourages private sector participation in the construction of financially viable bridges, bypasses, rail over-bridges, tunnels, etc.
  • For Road Projects that are not financially viable, Rajasthan has introduced mechanism like BOT with Viability Gap Fund (VGF). Development of the State highways and major district roads have been taken up using this model.
  • Under the State Road Development Fund Act, 2004, a non-lapsable State Road Fund (SRF) was created through levy of 50 paisa Cess on petrol / diesel. SRF is being leveraged to take up large/mega State Highways projects

Urban Infrastructure:

  • PPP projects in the Urban Infrastructure sector are being intensively pursued  include the Metro Rail Project in Jaipur, Exhibition-cum-Convention Centre in Sitapura, Jaipur and Ring Road Project in Jaipur.

Social Sector:

  • Education: Government of Rajasthan intends to engage private sector participants to design, finance, establish, operate, manage and maintain 165 secondary schools (from 6th to 12th) for a period of 30 years.
  • In the higher education segment, the State Government has initiated a project for establishment of a University for Physical Education and Sports in Jhunjhunu on PPP mode.
  • State Government has also set up some ITIs, Polytechnics and Engineering Colleges on PPP mode in lagging areas.
  • Indian Institute of Information Technology (IIIT) is proposed to be set up on PPP mode at Kota.
  • Some projects to provide houses to the economically weaker sections of the society have also been developed on PPP mode under the State’s Affordable Housing Scheme.

Water Sector:

  • Project development and structuring for a few water supply projects on PPP format have already been initiated. These include four projects, two of water supply in Ajmer and Udaipur  towns, and two pilot projects for water supply in Jaipur (Mansarovar)  and Kota with focus on reduction in non-revenue water.

Power Sector:

  • PPP model has been extend to power distribution in Kota and Bharatpur. Kolkata-based CESC has been given the rights.
  • Lignite based Power Plant in Bhadresh (Barmer) (Total 8 Units) is being implemented on Build, Own, Operate and Maintain (BOOM) basis with an investment of Rs. 5,000 crore

Tourism Sector:

  • Projects under PPP include Jal Mahal Integrated Tourism Project, Restoration and Conservation of Tijara Fort, Alwar

IT Sector:

  • To  modernize communication infrastructure Rajasthan Government is implementing RajSWAN project on BOOT basis.
  • Common Service Centers Project. A total of 6,626 kiosks are being set up across the State under the project. These CSCs will be managed by Village Level Women Enterprises (VLWEs) through service center agencies.

Rajasthan: New Initiatives taken under PPP Model

A. Rajasthan’s PPP model for Primary Health Centers (PHC’s)

In June 2015, Rajasthan Government decided to run PHC public-private partnership (PPP) mode. There were 2,082 PHCs operating in Rajasthan. In first phase, 90 out of these 2082 were handed over to be run in PPP mode.  Selection of private partners  was done through the open bidding system and private operators were asked provide doctors, paramedics and other staff, free OPD, and 24-hour emergency scheme among other things.

Why PPP for PHC:

  • Shortage of staff: the identified PHC had shortage of medical officers and facilities were not available as per the standards.

Case Study: SCALE Rajasthan

Going forward on PPP model, Rajasthan government handed over control of 30 PHCs and 153 sub-centers (SCs)-chosen from among the worst-performing centres- across 12 districts in the state to Wadhwani Initiative for Sustainable Healthcare (WISH) foundation.worst-phc-districts

WISH  foundation took responsibility for day-to-day management, bringing in technical support and innovative technologies to upgrade services, in addition to carrying out government-mandated immunisation and vaccination programmes. In return, Rajasthan government reimbursed operating costs, improve the regulatory environment and scale up successful innovations across the public health system.

Positive Outcomes of Initiative:

  • Cleanliness in PHC has been a major change. Along with cleanliness, there has been behavioural change in the doctors and the medical staff.
  • The private PHC’s have now covered 4,00,000 population and outpatient departments at these centres saw an 80 per cent increase in patients in 6 months and institutional deliveries had increased by 35 per cent.
  • Technology Innovation: The change in mode of operations has allowed infusion of new technology likesmartphone-based test for haemoglobin levels and a mobile pathology lab at grass root level.

Concerns Remaining:

  • The real challenge is to extend PPP to the entire health system. Unless private companies have a sense of public service, this could devolve into a mere money-making enterprise and could jeopardize the complete national health programme.

B. PPP model for Public Distribution System

Rajasthan Government introduced public private partnership (PPP) in Public Distribution System (PDS) through Annapurna Bhandar Yojna. The government signed MOU with the Future Group to sell multi-brand consumer goods through the ration shops. In the first phase, the scheme was implemented through 5,000 ration shops.

Positive Outcomes:

  • annapurnaAnnapurana stores have been proclaimed has Rural Malls where benefits of modern retail have been extended to the people of the state through PDS shops. These fair price shops will now get branded consumer products from the Future Group’s portfolio, over and above the grains, vegetables, sugar, and so on, already available at the PDS outlets.
  • The scheme has been an entrepreneurship drive with 5,000 FPS dealers turning into entrepreneurs with Annapurna Bhandar. It has increased dealers sales and allowed them to operate profitably.

C. Development of Dak Bungalows

dak-bunglow

In October 2016, Rajasthan Government decided to develop Dak Bungalows like three star hotels on public-private partnership (PPP) model. In the first phase of the project, Dak Bungalows in Ajmer, Bharatpur, Jaipur, Jodhpur, Bikaner, Alwar, Bhilwara, Jaisalmer, Mount Abu and Nathdwara will be taken up.

According to the policy, about 20 per cent of the rooms in the Dak Bungalows will be reserved for government officials and other employees and remaining 80 per cent will be open for all.

D. Other PPP initiatives in Rajasthan

  • All nationalized routes in Rajasthan were nationalized, enabling private bus operators to ply buses on them.
  • In addition, private players have also  been allowed to operate from government bus stands.