Let us herald the New Year with some heartening news for Indian infrastructure. If private investment and financial closure of some huge projects had not taken place in India and Brazil, the world would have seen a major decline in investments in infrastructure in 2009, by as much as 26 per cent, reports the Global PPP Network. The trend continued in 2010, as India and Brazil accounted for half of all investments in infrastructure in the world. Recently, the Global PPP Network conducted a web-based discussion on PPP in global infrastructure, and one of the major concerns respondents raised was the lack of any workable strategy so far for viable private participation in the social sectors. Worldwide, effective project cycle management is valuable but was found lacking while dealing with the government and implementations of the projects, especially in providing long-term and stable great volume investments.
This is an unsurprising truth in the country’s current environment, especially in sectors related to urban infrastructure such as transport. Creation of new urban centres by making airports the key to regional development have also been met with reluctance in general, except by the more aggressive real estate sector. Developers who bid and won airport projects in smaller cities, for example, are struggling for financial closure as investors look for short-term returns.
According to a benchmarking tool called Infrascope, the water sector in Brazil has seen successful implementation of PPP at a “sub-national†level. Popular unwillingness among road users to pay toll may mean that many of the toll highways may remain alternative routes, and not the primary carriageways—thereby already diluting the returns. An exception will be urban toll. Water and, to a lesser degree, power, will experience a similar resistance. These experiences should be indicators to the policymakers that PPP is badly needed in terms of investment and expertise, but may not necessarily imply immediate viability. A 360-degree planning has often eluded our nation’s growth—exemplified emphatically by the way our cities have grown in ugly and unsustainable ways—and sure enough, now there is an immediate need to evolve a solution to ensure that government and private investors invest longer term in projects with extended gestation periods.
The magnitude of our infrastructure is poised at a juncture where some scale of validation of standards and benchmarking is required, perhaps on the lines of Infrascope, taking stock of factors that include fairness and openness in bidding, dispute resolution mechanism, operational maturity, and government support for low-income users. Such independent measurement will help both policymakers and the industries gain better clarity on where the input needs to be scaled up.
This may be true especially of urban transport infrastructure, where, as our cover story probes, cities need to be careful whether they use yardsticks or benchmarks while they plan their “dream solutions†in urban transport. Should they routinely invest in new technology in a sort of an intercity race rather than be discreet enough to have an overall city plan?
We’d love to hear from you on our issue, but especially on the cover story on urban transport infrastructure. Do email or call us to tell us what you think.
Wish you a rewarding and prosperous New Year!
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