Experts feel that the objective of the public private partnership (PPP) policy of the government should be to allocate the project risks optimally, rather than transfer them wholesale to the private sector.
Experts and policy makers are debating the fate of PPP projects in the country in the wake of some private contractors exiting key infrastructure contracts like metro rail, highway etc.
Recently, Reliance Infrastructure (R-Infra) terminated its contract for operating the Airport Express Line in Delhi owing to unviability of the venture.
Similarly, GVK Infrastructures, GMR Infrastructure and some other developers exited key infrastructure projects in recent months.
The Draft Policy of PPP envisioned that the government shall identify different types and degrees of risks during the project life-cycle and configure appropriate mitigation measures.
Experts suggest that the government must attempt to apportion risks to the entity that is best suited to manage them. The government must take into account the legitimate concerns of the stakeholders while allocating risks. In the normal course, the public sector would not take on risks that the private sector has better ability to bear.
However, risks that the public sector is more competent of mitigating in the normal course of the business — such as ensuring availability of unencumbered land for a project or obtaining mandatory clearances of regulatory authorities before commencement of the project — would be retained by it, experts opine.
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