AIMA conference on PPPs - a report

The following is my report on the "All India Management Association (AIMA) Conference on Public Private Partnerships: Issues of Governance", held at Hotel Lalit Ashok, Bangalore, on Friday, the 16th July.

Ms Rekha Sethi, Director General, AIMA, gave a short welcome address. Mr K Jairaj, Chairman, AIMA Centre for Public Governance, and Addl Chief Secretary, GoK, gave a talk to set the context. Following this, Mr Gajendra Haldea, Advisor on Infrastructure to Dy Chairman, Planning Commission, gave the key-note address, over a ppt presentation. The highlights were as follows:
1) From 10th plan to 11th plan, the share of investment by the private sector in infrastructure projects had gone up from 25% to 36%.
2) The highest was in Telecom sector at 82%, which has resulted in the tele-density targets being reached 3 years ahead of time, with tarriffs coming down to the lowest in the world.
3) The lowest was in Railways at 4%, causing it to languish in its dismal state.
4) Next lowest was Power, resulting in the tarriffs in the country being about the highest in the world. This was in spite of the most modern '2003 Act' (which he had helped draft), enabling healthy competition, largely because of the deliberate tactics used by existing government players to thwart entry of private players into the field, particularly in distribution. And, this being a 'state subject', there's a limit to what the Central government can do about it.

He admitted that the transition has not been to smooth, including in the Telecom sector, where, because of the high license fee levied initially, the first two years of opening up had been extremely trying for the industry, and the sector was almost on the verge of collapse. Subsequently, when the government re-structured the licensing regime making for lower license fees, coupled with the revenue-sharing scheme, things not only fell in place, but led to an overnight boom. This clearly brought out the importance of the governments' role in creating the proper environment for growth. He went on to add that if the other sectors were not doing as well, the ministries concerned and the government, in general, need to be re-examining their roles.

Need I mention - all this was plain music to my ears. What I have stated here1, here2, and here3 come of relevance.

Keeping the above in view, his team was now engaged in preparing standardised procedures and documents, model RFQ/ RFP, manuals, rules for levy of user charges, model concession agreements, etc, based on the learnings so far. And, all of these are made available to the states for adoption, as applicable. He went on to add that PPPs are generally complicated arrangements, with each having its own peculiarities, and the success depended a lot on the proper management of the government's role.

The next speaker in the morning session was Mr Nasser Munjee, Chairman, Development Credit Bank Ltd, Mumbai, who said that the way forward for all services could fit into three boxes - privatisation, commercialisation, and PFI (private financial initiative). The only question remained as to which of the boxes a particular fitted into. He also emphasised the role of the government in regulation, where it's not doing a satisfactory job at present. Further, he went on to add that 'Five Year Plans' are an outmoded idea, and the earlier it's wound up the better.

The last speaker of the session was Mr Ranganath, the Chief Secretary, GoK, who apart from other things cited the example of the BIAL as a successful PPP initiative of the GoK.

During the interaction session, I raised the question to Mr Haldea 'if the downsides of privatisation of the Delhi power distribution was the reason for Bangalore holding back movement on the front?'. Mr Haldea stated that in the first place, the Delhi privatisation was not a satisfactory model, in that it has replaced a government monopoly with two private monopolies. He talked about how in the advanced countries, a consumer could source his supply from any of the many vendors through the common grid, and that the 2003 Act has provided for that. He lamented that that had not happened in Delhi, though he did not elaborate the point much. Though I tried to access him during the break, I could not quite manage it, since the media lot were literally mobbing him. And, he didn't stay on for later sessions.

The 2nd session was on PPP - case studies. It was chaired by Mr V Madhu, Principal Secretary - Infrastructure Development, GoK. After Mr Madhu's opening remarks, Mr Hari K Marar, Director, Operations, BIAL, Mr Lim Sin Tiow, CEO, Ascendas India (the company that has promoted the Whitefield IT park), and Mr Aniruddha Ganguly, EVP & Group Head, Business Integration, GMR group, spoke about their perspectives.

During the interaction session, I asked Mr Ganguly as to why his company chose to tow away the barge-mounted power plant from Tannirbhavi. Even as he appeared reticent to respond, Mr Madhu stated more or less that the GoK had committed an error in that regard, and that they will be back. He didn't elaborate.

The last session, post lunch, was a Panel Discussion on 'The Road Ahead', chaired by Prof K R S Murthy, Former Director, IIMB, and currently Chairman, ISEC ( Institute for Social and Economic Change), Bangalore. The panel comprised Mr Pradeep Singh, MD, IDFC Projects Ltd, New Delhi, apart from Mr Nasser Munjee, and a lady ( regret unable to recall name or what she is). Mr Murthy, in his opening remarks, suggested that the conference should perhaps have focussed more on PPP failures than successes, in order to draw upon the learning experiences for future. Further, he added that perhaps a reason for failures was the lack of stake-holder consultations during the conceptualisation stage, and interactions during the operations stage.  

The other panelists added their respective perspectives.

During the interaction session, I referred to the mention by Prof Murthy about the lack of interaction with stake-holders, and highlighted the example of the discussions on 'praja.in' on many of the projects, and more specifically the MCC-JUSCO water supply upgradation and out-sourcing deal (check this4), where Mr Manivannan, the then DC, Mysore, had openly participated in the discussions on the subject. I added that given the time and mobility constraints in today's world, perhaps that's the way forward. I further went on to cite the similar discussions we have promoted on 'praja.in' on the 'Commuter rail for Bangalore' after posting the outline of a well-researched feasibility report.

Mr Pradeep Singh lauded the 'praja.in' example, and stated that it seemed to hold good potential.

All in all, a good meeting. PPPs are clearly the way forward, and more and more such conferences will perhaps accelerate the move in that direction, and along the correct path, ensuring which becomes the key role of the government.

Muralidhar Rao

References:
1) http://praja.in/en/~banga...
2) http://praja.in/en/blog/m...
3) http://praja.in/en/blog/m...
4) http://praja.in/en/discus...