contractual agreement for mgmt or whole public enterprise. eg specialized port terminal for container handling by priv sector
allows priv sector skills to be brought into service delivery however public sector retains ownership of facility
priv contractor is paid a fee to manage and operate and payment is generally performance based. Usually short term period (3 - 5 years)
Advantages
Less risk due to shorter duration
least number of the conclave
Disadvantages
Almost all risk taken by public sector
Less scope for innovation
Turnkey Management Project
traditional public sector procurement model for infra facility
priv player selected through bidding process. Priv builds and designs a facility for a fixed fee which is one of the criteria for selecting the winning bids
scale of investment by priv player generally low for a short term period
Affirmage / Lease
leaseholder responsible for operating and maintaining the infra facility that already exists
generally, operator not required to make any large investment except for the case where this model is implemented with another. eg. Build Lease Transfer
Operator retains the revenue collected from the customer and makes a specified lease payment to the contracting authority
operator and contracting authority share revenue
Concession
Govt grants specific rights to a private player to build and operate a facility for fixed period
payments can take place both ways
such payment by govt may be necessary for making projects commercially viable
Area Concession
priv player responsible for full delivery of services in a specific area including operation, maintenance, construction and rehabilitation
operator responsible for all capital investments while assets are publicly owned even during concession period
public sector role shifts from being a service provider to regulating price and quality of the service
Hybrid Annuity Model
mix of BOT and EPC; introduced in 2015
generally three models for awarding national highway projects - EPC, BOT Toll, BOT annuity
Engineering, Procurement and Construction (EPC)
govt takes total funding of project
priv player provide engg and construction requirements
cost completely borne by govt and govt invites bids for engg expertise from contractors
procurement of raw materials and construction costs are met by govt
Build Operate Transfer (BOT)
conventional PPP model
priv partner responsible for designing, building, operating and transferring back facility to public sector
priv sector brings finance for project, takes responsibility for construction and maintenance
govt allows private sector partners to collect revenue from users
In BOT Annuity, developer constructs and maintains the roads and gets fixed payment from govt. Needs frequent govt payments
Traffic, Commercial risk on concessionaire and investment sustained by toll revenues
HAM as alternate for national highway projects
HAM = BOT + EPT. Govt gives 40% construction support during construction and remaining 60% as annuity payment throughout operations.
Company has no right to collect tolls and revenue is collected by NHAI and refunded to priv player in installment for 15 - 20 years
Benefits
compared to BOT annuity, it would ease cash flow pressure on govt
compared to BOT tolls, traffic risk is not associated with the concessionaire
operations and maintenance are handled by priv player, increasing efficiency of project
Swiss Challenge Method
priv player can submit a proposal (even without invitation) to govt for development of an infra project with exclusive IPR
Govt has 2 options
after buying IPR from original proponent, it can call for competitive bidding to award projects
Govt may also allow other players with similar capabilities to submit their proposals
if any proposal better than original, the original is asked to modify proposal
if he fails, project awarded to best bidder
used in road, housing projects
Draft PPP Rule, 2011 allows use of Swiss challenge only in exceptional circumstances - projects in rural areas or projects related to BPL
Advantages
encourage private players to bring innovation, tech, uniqueness
enhance cost efficiency, reduce red tape, shorten project timeline
Disadvantages
CVC observed there is lack of transparency and lack of fair and equal treatment of potential bidders
Planning Commission has advised state govt to adopt Swiss Challenge as an exception rather than rule
Vijay Kelkar Committee on revisiting and revitalizing PPP infra model has discouraged govt from following Swiss challenge metod
without strong regulatory framework, methods foster crony capitalism and also conducive to discretionary favour