Management of Services Under Public Private Partnership

MANAGEMENT OF SERVICES UNDER PUBLIC PRIVATE PARTNERSHIP

Management of services under public private partnershipSubmitted toDr. Gyan PrakashSubmitted byHemant Singh Kushwah 2013PSM-006Kunal Kumar Jha 2013PSM-007Different sectors under PPP in IndiaHighwaysRailwaysPortsAirportsTelecom

HighwaysAnnual growth projected at 12-15% for passenger traffic, and 15-18% for cargo traffic.Over $50.60 billion investment is required over the next 5 years to improve road infrastructure.A large component of highways is to be developed through public-private partnerships :Several high traffic stretches already awarded to private companies on a BOT basis.Two successful BOT models are already in place one is the annuity model and another is the upfront/lumpsum payment model. Investment opportunities exist in a range of projects being tendered by NHAI for implementing the NHDP contracts .A US $ 5 billion project plans to lay 6 lane roads over 6,500 kms of National Highways on the Design Build Finance and Operate (DBFO) basis in Golden Quadrilateral and other high traffic stretches.

Participation by Government100 per cent FDI under the automatic route in all road development projects. 100 per cent income tax exemption for a period of 10 years.Cabinet Committee on Economic Affairs (CCEA) has agreed upon the National Highways Fee (Determination of Rates and Collection) Rules, 2008 to establish uniformity in fee rate for public funded and private investments projects. An increment in the overseas borrowing amount of infrastructure sectors, to US$ 500 million from US$ 100 million. Offering cheaper loans for highway projects that will speed up the projects worth more than US$ 12. 70 billion under separate phases of the NHDP. The Ministry of Shipping and Road Transport is considering a green corridor highway project solely for farmers with no toll charges that would link rural roads with National Highways. This is likely to be developed along with the six-lane project under the NHDP.

Private sector participationInvestments of the order of US$ 500 billion are expected to take place in the coming years.The private sector will be largely involved both at construction contracts and BOT levels.Since January 2006, the Public-Private Partnership Appraisal Committee (PPPAC) has granted approval to a total of 87 projects including 77 highway projects. The PPPAC approves the infrastructure projects worth US$ 5.98 billion on November 2008 . This includes 21 highway projects to be taken up under NHDP Phase III and V.Some private partners are Reliance Energy, L&T Inter-state Road Corridor Limited, Jaiprakash Association Limited, Lanco Infratech, DS Construction, etc.

Service providedSectorServices under PPPPrivate partnersHighwaysTo set up Trauma centres at every 100 kms on National Highways.Motels to be opened at National Expressways.

Foreign company such asIsolux Corsn of Australia with the joint venture of Morgan Stanley Infrastructure fund (MSI).Indian companies such as DS Construction Ltd., GMR Infrastructure Ltd., Hindustan Construction Company, Larsen & Toubro Ltd., Ideal Road Builders Infrastructure Developers, Gammon Infrastructure Projects Ltd. and Soma Enterprises Ltd.Railways Over past few years Indian Railways has remarkably transformed itself to set a bench mark in the global level. Increase in income through advertising on all Rajdhanis, with the cost of advertising being around US$ 1.26 million per train.Introduction of new generation trains that would be fuel-efficient, recyclable and have low-emission to generate certified emission reduction credits.Renewal of 44.5 million of PSC (Pre Stressed Concrete) sleepers has been set for open line works.Technological up-gradation and modernization for higher operating efficiency.Development of PPP envisaged in new routes, railway stations, logistics parks, cargo aggregation and warehouses etc.Development of 100 budget hotels with private participation in the vicinity of railway stations.Installation of Wi-Fi for providing wireless access at 500 stations.

ContinuesIntroduction of marketing rights for advertising on railway tickets and reservation charts.Establishment of integrated logistic parks on unused lands.Development of agri-retail hubs, cold storage houses, multi-purpose warehouses on surplus land with the Railways.Training of railway managers to meet future challenges, Indian Railways is planning to set an international management institute in New Delhi.Renewal over 2941 kms, which will require 3,39,288 tonnes of rail steel, and sleeper renewal over 2382 kms.Implementation of Dynamic Pricing Policy, Tariff Rationalization, Non-Peak Season Incremental Freight Discount Scheme, Empty flow Direction Freight. Services providedSectorCore servicesServices under PPPPossible partnersRailwaysPassenger reservation information online-offline both (tatkal reservation, train running status, sms service, current reservation)Transportation of goods/luggages.Postal and courier transportation services.

Provision of foot-over bridges, escalators, lifts, etc. at all major stations including through PPP route.Battery operated cars for differently-abled and senior citizens at platforms of all major stations.Setting up of Food Courts at major stations for providing regional cuisine while on board through emails, SMS and Smart Phones, etc. Building boundary walls around stations through PPP route .Harnessing solar energy by utilizing roof top spaces of stations, railway buildings and land including through PPP mode.Meal on wheel.Extension of Dual Display Fare Repeaters at all the Ticket Counters through PPP.Wi-fi Services in A1 and A category stations and in selected trains.

Rail Tel is providing wi-fi facility.Travelkhana.com is the private partner to provide meals on wheel.Comessum is the private food partner at every railway station.Ports:Government participation

Formulation of a National Maritime Development Policy to facilitate private investment, improve service quality and promote competitiveness, and US$ 11.33 billion has been allocated for the same.An investment of more than US$ 9.07 billion will be made by 2015 for 111 Shipping Sector Projects.In 2008-09, the Ministry of Shipping had launch 10 major expansion projects at an estimated investment of US$ 1.06 billion, 60% of which is allocated for the Chennai mega container terminal.Permission for 100 percent foreign direct investment (FDI) for port development projects under the automatic route.100 per cent income tax exemption is provided for a period of 10 years for port developmental projects.Opened up of all the areas of port operation for private sector participation.The experience of operating berths through PPPs at some of the major ports in India has been quite successful. It has, therefore, been decided to expand the programme and allocate new berths to be constructed through PPPs. A model concession agreement is being formulated for this purpose.ContinuesA high level committee has finalized the plan for improving rail-road connectivity of major ports. The plan is to be implemented within a period of three years. Further, changes in customs procedures are being carried out with a view to reducing the dwell time and transaction costs. The Government has also decided to empower and enable the 12 major ports to attain world-class standards. To this end, each port is preparing a perspective plan for 20 years and an action plan for seven years.The National Maritime Development Programme is expected to bring a total investment of over Rs.50,000 crore in the port infrastructure. Such improvement in the scale and quality of Indian port infrastructure will significantly improve Indias competitive advantage in an increasingly globalized world.

Private participation:A leading private shipyard, ABG Shipyard has decided to set up a greenfield shipyard in south Gujarat with an investment of USD 255.58 million. The new shipyard will be set up over 300 acres. Gujarat-based Adani group is setting up a ship building and repair yard at about USD 212.98 million. Larsen and Toubro Ltd has chosen Kattupalli port, in Thiruvallur district, near Chennai, as the location to build the over USD 425.97 million mega- shipbuilding yard. Major shipping companies, such as Shipping Corporation of India (SCI), Great Eastern (GE) and Essar have placed orders worth USD 3.3 billion for 58 ships in Korea and China. SCI has placed orders for 32 ships worth USD 1.87 billion and will be further welcoming bids for its USD 3 billion order of 40 ships. GE has placed an order worth US$ 780 million for 14 ships, while Essar has ordered 12 ships worth US$ 630 million. Service providedSectorServices under PPPPrivate participationPortTo improve the services (like cargo service, trading of goods internationally and domestically ) there is need to improve the quality of equipments related to loading and unloading of goods with the coming of private partners the efficiency increases.Some of these foreign players are Maersk (JNPT, Mumbai), P&O Ports (JNPT, Mumbai and Chennai), Dubai Ports International (Cochin and Vishakhapatnam) and PSA Singapore (Tuticorin).Mundra Port and Special Economic Zone Limited, Ennore Port Limited, Mormugao Port Trust, Kakinada Seaports Limited, Krishnapatnam Port Company Limited, Dhamra Port Company Limited and Adani Petronet (Dahej) Port Private LimitedAirportsTotal no. of Airports and Airstrips in India are 454.The Airports Authority of India (AAI) owns and operates 97 airports16 are designated as international airports.Indian private airlines, Jet, Sahara, Kingfisher, Deccan, Spicejet - account for around 60% of the domestic passenger traffic.Average no. of Passengers (Per Day)Mumbai 20128 Delhi 18228 Chennai 7934 Bangalore 3455 Hyderabad 3327 Kolkata 2206 Source: Director General of Civil Aviation, AAI

Privatization A projected investment of USD 8.5 billion has been planned for the development of Indian airports during the 11th plan.Mumbai and Delhi airports have already been privatized.These two airport are being upgraded at an estimated investment of US$ 4 billion for the period 2006-16AAI has planned a heavy investment of USD 3.07 billion over the next five years. Out of it 43 per cent will be for the three metro airports in Kolkata, Chennai and Trivandrum. The rest will be invested in upgrading other non-metro airports and in the modernization of the existing aeronautical facilities. ContinuesTraffic growth has exceeded 20% per annum during the past two yearsMajor airports such as Chennai and Kolkata are also proposed to be taken up for modernization through the PPP route.Upgrading of the ATC services at the airports ,that resolves Issues relating to customs, immigration and security that enhances the efficiency of airport usage. A Greenfield airport is already operational at Bangalore and the one at Hyderabad, built by private consortia at a total investment of over USD 800 million, will be operational soon.

Service providedSectorServices under PPPPrivate participationAirportDevelopment of greenfield airports in India.Food courts at airports.Total infrastructure of airports in India (including ticketing counter, cleaning of airports, local vehicles used inside the airports) are managed by private parties. Manage the air traffic and thus reducing the flight delays.GMR Infrastructure Ltd, MaharashtraAirport Development Company (MADC)TelecomThe Department of Telecommunication (DoT) has been much active in policy formulation, planning, executing, and implementation of in its initiatives.The Department of telecommunication (DoT) has been focusing on all areas in the sector, such as basic telecommunication, mobile telephony, Internet service, broadband connections, and many more.The year recorded the total number of 156.55 millions of telephone connection.Over 4 million new users are added every month mostly in wireless. The department is eying a total number of 500 million new connections by the end of 2015.India expected to be among the fastest growing telecom markets in the world.

Services offeredMobile Number Portability (MNP)-This will enable the consumers to retain the same number irrespective the service provider, in the same area. National Do Not Call Registry (NDNC) - A regulation has been implemented with a view to regulating the unsolicited calls from the telemarketers. The latest and the new being offered by the government is the broad guidelines for the third generation (3G) mobile service and broadband Wireless Access. Telecom Devices and Software for Internet, Broadband and Direct To Home Services. Set Top boxes, Gateway exchange, Modem, Mobile handsets and consumer premise equipments, Gaming devices.

Service providedSectorServices under PPPPrivate participationTelecomTelecom Devices and Software for Internet, Broadband and Direct To Home Services. Set Top boxes, Gateway exchange, Modem, Mobile handsets and consumer premise equipments, Gaming devices.Mobile Number Portability (MNP)Bharti Telecom Ltd, Idea, Reliance, Vodafone, Airtel, Tata.ReferencesPublic Private Partnership, Ministry of Finance, Government of India.www.pppinindia.com

THANK YOU