Professional Documents
Culture Documents
ON
PART-1 (SEMESTER-2)
(2015-2016)
INTERNAL ASSESSMENT
STRATEGIC MANAGEMENT
Submitted To:-
Submitted By:-
ROLL NO:-08
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S.I.E.S (NERUL) COLLEGE OF ARTS, SCIENCE & COMMERCE
CERTIFICATE
(2015-2016)
Date:-
Place:-
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DECLARATION BY STUDENTS
Thank you,
Yours faithfully,
VANITA BHUJBAL
ROLL NO:-08
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ACKNOWLEDGEMENT
I would like thank our principal, Prof. Rita Basu and Prof. Koel Roy
Choudhury who Co-ordinate for giving me an opportunity and
encouragement to prepare the project.
Last but not the least, I would like to thanks my project guide for
guiding and helping me throughout the preparation of my project, right
from selection of the topic till its completion.
VANITA BHUJBAL
Roll No: 08
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INDEX
CHAPTER-1
5
INTRODUCTION OF PUBLIC PRIVATE PARTICIPATION
PPP as "a long-term contract between a private party and a government entity,
for providing a public asset or service, in which the private party bears
significant risk and management responsibility, and remuneration is linked to
performance". PPPs typically do not include service contracts or turnkey
construction contracts, which are categorized as public procurement projects, or
the privatization of utilities where there is a limited ongoing role for the public
sector.
Public-private partnership (PPP) in infrastructure is a relatively new
experience in most developing countries of the Asian and Pacific region.
Although many governments have considered various steps to promote PPPs in
their countries, lack of capacity in the public sector remains to be one of the
major problems in implementing PPP projects. So far, only few countries have
established institutional arrangements and developed manuals and resource
materials in support of PPP development and for the capacity-building of their
public officials. In the absence of such established institutional arrangements
and resource materials, public officials face difficulties in project development
and implementation, and general public can have many misunderstandings
about PPPs.
Public-private partnerships (PPPs) are a mechanism for government to procure
and implement public infrastructure and/ or services using the resources and
expertise of the private sector. Where governments are facing ageing or lack of
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infrastructure and require more efficient services, a partnership with the private
sector can help foster new solutions and bring finance.
PPPs combine the skills and resources of both the public and private sectors
through sharing of risks and responsibilities. This enables governments to
benefit from the expertise of the private sector, and allows them to focus instead
on policy, planning and regulation by delegating day-to-day operations.
The PPP in Infrastructure Resource Center for Contracts, Laws and Regulations
(PPPIRC) seeks to give a offer practical tools for developing a legal
enabling environment and regulation of PPPs conducive to PPPs and
to provide sample and annotated contracts and bidding documents
from different sectors for PPP projects.
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1.1 ORIGIN:
PPPs are organized along a continuum between public and private nodes and
needs as they integrate normative, albeit separate and distinct, functions of
societythe market and the commons. A common challenge for PPPs is
allowing for these fluctuations and reinforcing the intended partnership without
diminishing either sector. Multi sectoral, or collaborative, partnering is
experienced on a continuum of private to public in varying degrees of
implementation according to the need, time restraints, and the issue at hand.
Even though these partnerships are now common, it is normal for both private
and public sectors to be critical of the others approach and methods. It is at the
merger of these sectors that we see how a unified partnership has immediate
impact in the development of communities and the provision of public services..
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1.2GROWTH AND DECLINE :
From 1990 to 2009 nearly 1,400 PPP deals were signed in the European Union,
representing a capital value of approximately 260 billion. Since the onset of
the financial crisis in 2008, estimates suggest that the number of PPP deals
closed has fallen more than 40 percent.
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surveyed, the provision of public services through contracts with private firms
peaked in 1977 at 18% and has declined since. The most common form of
shared service delivery now involves contracts between governments, growing
from 17% in 2002 to 20% in 2007. "At the same time, approximately 22% of
the local governments in the survey indicated that they had brought back in-
house at least one service that they had previously provided through some
alternative private arrangement.
1.3 CONTROVERSY :
A common problem with PPP projects is that private investors obtained a rate of
return that was higher than the governments bond rate, even though most or all
of the income risk associated with the project was borne by the public sector.
A 2008 report by Price Water house Coopers argued that the comparison
between public and private borrowing rates is not fair, because there are
"constraints on public borrowing", which may imply that public borrowing is
too high, and so PFI projects can be beneficial by not putting debt directly on
government books.
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"the advantages of PPPs must be weighed against the contractual complexities
and rigidities they entail".
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CHAPTER -2
Different parts of the World Bank Group provide Risk Mitigation Tools and
Guarantees to client countries. Access the World Bank Guarantee
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website for information about World Bank Guarantees. The International
Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency
(MIGA) provide risk mitigation for projects also. Go to
the IFC and MIGA websites for more information.
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in the infrastructure development has also been given more encouragement in
India.
CHAPTER-3
There is no single PPP engagement model that can satisfy all conditions
concerning a projects location setting and its technical and financial features.
The most suitable model should be selected taking into account the countrys
political, legal and socio-cultural circumstances, maturity of the countrys PPP
market and the financial and technical features of the projects and sectors
concerned. This has led to innovation in the engagement models.
BUILD OPERATE TRANSFER (BOT) :
Under BOTs, the private partner provides the capital required to Build the
new facility, Operate & Maintain (O&M) for the contract period and then
return the facility to Government as per agreed terms.
Importantly, the private operator now owns the assets for a period set by
contractsufficient to allow the developer time to recover investment
costs through user charges.
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Design-Build Operate (DBO) : Where the ownership is involved in
private hands and a single contract is let out for design construction and
operation of the infrastructure project.
Joint Venture:
Under a joint venture, the public and private sector partners can either
form a new company (SPV) or assume joint ownership of an existing
company through a sale of shares to one or several private investors.
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A key requirement of this structure is good corporate governance, in
particular the ability of the company to maintain independence from the
government, because the government is both part owner and regulator.
Management Contract :
The private contractor is paid a predetermined rate for labour and other
anticipated operating costs.
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3.2SECTOR-WISE PRIVATE PARTICIPATION STATUS AND ISSUES:
India has been growing at a level of 9.3 per cent, on an average, during the last
three years and the supply of infrastructure has also improved to an extent to
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cope up with the increasing demand. But gaps are widening. The developments
in the infrastructure projects since the introduction of economic reforms could
be captured on the basis of two major data bases in addition to respective
Ministry sources one by the Planning Commission on PPP projects and the
other by the World Bank on PPI database. As we have already discussed about
the PPI database, let us have a brief overview on the status of sector-wise
infrastructure projects based on Government of India databases and throw some
light on the sector specific issues.
A. Infrastructure Project sunder PPP Model
Since most of the infrastructure services are rendered by the Government,
commercial approach towards cost recovery has not been adopted, and with the
limited resources at Governments disposal, PPP has been encouraged to fill the
infrastructure gap. To support the PPP model projects, a Public Private
Partnership Appraisal Committee (PPPAC) was constituted in January 2006.
The PPPAC has been adding value by shortening the approval process within
the Government, reducing the transaction costs and acting as a central focal
point for identifying and disseminating best practices in rolling out PPP across
sectors and Ministries of the Government. Since its constitution, it has granted
approval to 65 projects, with an estimated project cost of Rs.53,136 crore
POWER SECTOR
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requirements. This huge capacity addition may not be feasible viewing from the
pace of development of ongoing and proposed new projects.
TELECOMMUNICATION SECTOR
Usually, the Government owned operators play a major role in the development
of telecom sector worldwide. In India, private investment and association of the
private sector was needed in a big way to bridge the resource gap. Therefore,
the telecom sector was opened up for private participation after the
announcement of industrial policy in 1991 to bridge the gap. As a result, the
private telecom companies have started operations in the Indian soil due to vast
availability of market potentials. Slowly, they picked up their market share and
currently they outperform the government owned services due to increasing
commercial gains.
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PETROLEUM SECTOR
The PPP model may be considered as a successful one not only in the world
over but also in India in the development of road sector as majority of the on-
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going highways development projects have been taken up under this model.
With a view to attract private investment in road development, maintenance and
operation, National Highways Act (NH Act) 1956 was amended in June 1995 to
facilitate private participation in road infrastructure projects. While there are a
number of forms of PPP, the common forms that have been used for
development of National Highways are Build Operate and Transfer (BOT) on
Toll basis, BOT on Annuity basis and SPV basis. At present, the Government
has embarked upon a massive programme to develop highways through the
National Highways Development Project (NHDP), Phase-I to Phase-VII. Under
these projects, 13,146 Kms of National highways have been proposed at an
estimated cost of Rs.54,000 crore. So far 82 projects valued about Rs.23,104
crore have been taken up on BOT (Toll) basis. Of this, 34 projects have been
completed and remaining 48 projects are under progress. Under annuity basis,
25 projects covering a length of 1376 Kms have been taken up, of which eight
projects have been completed and the remaining projects are under progress .
AIRPORTS
There are 449 airports/airstrips in the country. Among them, the Airport
Authority of India (AAI) owns and manages 92 airports and 28 civil enclaves at
defence airfields, which provides air traffic services over the entire Indian
airspace and adjoining oceanic areas. The legislative framework for
privatisation of airports already exists in India. Some airports have already been
owned by State Governments, private companies and even individuals.
However, the financing of airport infrastructure has some inherent problems.
These projects have a large element of cost, very long gestation period and
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highly uncertain returns on investment based on several assumptions of traffic
growth that may not materialise. It has been estimated by the Task Force on
Financing Plan for Airport constituted by the Planning Commission that private
sector investment for the modernisation and development of various airports
under PPP model would be Rs.31,100 crore (Table 15).
There are 12 major ports and about 60 non-major and private ports in the
country. With the awarding of infrastructure status for inland waterways and
inland ports, the construction of ports under private sector has picked up. At
present, 36 private/captive port projects involving capacity addition of about
137 MTPA3 and an investment of about Rs.9,756 crore are at various stages of
evaluation and implementation. Out of these, 13 projects with capacity addition
of about 47.40 MTPA involving an investment of about Rs.2662 crore have
been operationalised and four projects are under implementation through private
participation. Development of other ports is under slow progress, which needs
attention of all concerned for early execution. The main areas which have been
thrown open for private investment under BOT basis include construction of
cargo handling berths, container terminals, warehousing facilities, installation of
cargo handling equipments, construction of dry-docks and ship repair facilities.
There is a plan to develop 54 new berths through PPP model in the next five
years, which are to be hastened to relieve the port congestion problem.
RAILWAYS
The demand for railway containers has grown rapidly due to increasing
containerisation of cargo during the recent period. Since the beginning of the
year 2006, container movement has been thrown open to competition and
private sector entities would be eligible for owning and operating container
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trains. The rapid rise in international trade and domestic cargo has placed a great
strain on the Delhi-Mumbai and Delhi-Kolkata rail track. Government has,
therefore, decided to build a dedicated freight corridor on these high density
routes. This corridor would be constructed, operated and maintained by a
corporate entity on commercial principles. Part of eastern, western and
dedicated fright corridors would be undertaken through PPP model. The
approach to be adopted for the dedicated freight corridor would herald the
ownership and operation of a large number of freight trains by competing
private entities. It is expected that the proposed separation of rail from wheels
would initiate a paradigm shift in the functioning of Indian railways.
URBAN DEVELOPMENT
Over the next 25 years, modernising and expanding the water, electricity, and
transportation systems of the cities of the world will require approximately $40
trillion. But the cost of not meeting the challenge could be even greater than $40
trillion (Viren Doshi et al, 2007). In the Indian scenario, there are about 400
cities with more than 100,000 population, which are facing immense problems
in terms of financial management, in the provision of public services, and
overall city
management. Government or local bodies alone could not develop the cities and
solve the problems. Development of urban infrastructure should be an integral
part of development strategy, which includes mass rapid transport system,
drinking water, sewage system, solid waste management, urban roads and
lightings, etc. However, investment in these areas has been inadequate.
Development of this sector with the PPP may have a changing pace in the
overall economic development, which requires an investor friendly environment
with commercial viability of the projects. Overall, the solution to overcome the
urban infrastructure bottlenecks is to organise the infrastructure more
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effectively, balance the public-private interest, reinvigorate electricity, water and
transportation system by integrating finance, governance, technology and proper
designing of the projects.
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Some of the typical requirements of the private sector are:
Private investment is feasible in size and manageable considering the
technical managerial and financial capacity of the private sector;
A fair return on investment taking into account the level of
involvement and assumption of risks;
Security of the private investment;
Political and social comfort in cost recovery pricing of the services;
Government policy continuity; and
Predictable timeframe in administrative and regulatory processes.
The implementing agency possibly will also have to consider other
specific requirements that the private sector should have for specific projects.
Concerning the capacity in the government, the implementing agency
should take into consideration the following matters before considering further
work on the project development:
Whether there is any PPP unit in government or any agency that can
help in project development and implementation;
What previous experience exists within the government and how
much capacity does the agency have in implementing the project;
How much fund is available for project development and, if needed,
how more funds can be obtained.
CHAPTER-4
The financial crisis of 2008 onwards brought about renewed interest in PPP in
both developed and developing countries. Facing constraints on public
resources and fiscal space, while recognizing the importance of investment in
infrastructure to help their economies grow, governments are increasingly
turning to the private sector as an alternative additional source of funding to
meet the funding gap. While recent attention has been focused on fiscal risk,
governments look to the private sector for other reasons:
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Exploring PPPs as a way of introducing private sector technology and
innovation in providing better public services through improved operational
efficiency. Incentivizing the private sector to deliver projects on time and within
budget Imposing budgetary certainty by setting present and the future costs of
infrastructure projects over time.
Supplementing limited public sector capacities to meet the growing demand for
infrastructure development.
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There are a number of potential risks associated with Public Private
Partnerships:
Development, bidding and ongoing costs in PPP projects are likely to be greater
than for traditional government procurement processes - the government should
therefore determine whether the greater costs involved are justified. A number
of the PPP and implementation units around the world have developed methods
for analyzing these costs and looking at Value for Money.
There is a cost attached to debt While private sector can make it easier to
get finance, finance will only be available where the operating cash flows of the
project company are expected to provide a return on investment (i.e., the cost
has to be borne either by the customers or the government through subsidies,
etc.) .
Some projects may be easier to finance than others (if there is proven
technology involved and/ or the extent of the private sectors obligations and
liability is clearly identifiable), some projects will generate revenue in local
currency only (e.g. water projects) while others (e.g. ports and airports) will
provide currency in dollar or other international currency and so constraints of
local finance markets may have less impact.
There is no unlimited risk bearing private firms (and their lenders) will be
cautious about accepting major risks beyond their control, such as exchange rate
risks/risk of existing assets. If they bear these risks then their price for the
service will reflect this. Private firms will also want to know that the rules of the
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game are to be respected by government as regards undertakings to increase
tariffs/fair regulation, etc. Private sector will also expect a significant level of
control over operations if it is to accept significant risks.
Private sector will do what it is paid to do and no more than that therefore
incentives and performance requirements need to be clearly set out in the
contract. Focus should be on performance requirements that are out-put based
and relatively easy to monitor.
The private sector is likely to have more expertise and after a short time have an
advantage in the data relating to the project. It is important to ensure that there
are clear and detailed reporting requirements imposed on the private operator to
reduce this potential imbalance. A clear legal and regulatory framework is
crucial to achieving a sustainable solution .
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4.3DESCRIPTION OF ENVIRONMENT
General
Primary data through measurements and field surveys; and secondary data
from secondary sources are to be collected in the study area within 10 km
radius from Aerodrome Reference Point (ARP). Primary data should cover one
season other than monsoon and secondary data is to cover one full year. The
basis for selection of these criteria is that the aircraft gains a height of 1000ft in
this area below which noise and air pollution are generated maximum during its
take off stage. Secondary data should be collected within 15 km aerial distance
for the parameters as specifically mentioned at column 9 (III) of Form I of EIA
Notification, 2006. Details of secondary data, the method of collection of
secondary data, should be furnished. Similarly the proposed locations of
monitoring stations of water, air, soil and noise etc should be shown on the
study area map.
2.1 Soil:
Land is one of the important and rare resources. Airport projects require
considerable land area for development of activity areas, operational and non-
operational buildings, areas for ancillaries, utilities including townships.
Sometimes acquisitions of large stretches of land and areas being used by the
local habitat may be necessitated requiring rehabilitation measures. Availability
of land for earmarking for the airport without causing undue hardship to local
habitat and their socio cultural and economic aspects is very important. Studies
on land use aspects of ecosystem play an important role in identifying sensitive
issues in the past and present development of the region. Existing baseline status
of land use can be determined through a study of changes in the land use pattern
in the past 10yrs by collecting data from secondary sources such as census, and
land records. Interpretation of satellite data of current year will bring out the
trends in the changes of land use pattern in the past. The land use pattern in
study area is analysed with the help of a map to 1:25000 scale based on recent
satellite imagery of the study area delineating the cropping pattern, forest area
and built-up area etc.
Soil samples are collected all around the project site covering the
agricultural and reserved forestland, if any in the study areas. Sampling
frequencies and the methods of baseline environmental quality monitoring
are given in Annexure 3. The samples are collected during the study period
and analysed for physical, chemical parameters and heavy metal
concentrations, as per standard methods of analysis. The nature of the soil
is to be discussed based on the classification.
2.2Physiography and Drainage Patterns
The terrain and hill slope, general slope and elevation of the area, the flow
direction of streams and rivers, the water bodies and wet lands and the
vegetation which together describe the physiography of the land, will control
the drainage pattern in the region. Land farms, terrain, may get affected due to
construction of airport. . High rise buildings, industrial areas and zones,
slaughter houses and other features of flight safety importance may also be
marked on the map.
Secondary data from Central Water Board GOI; State ground water department,
State Irrigation Department is to be obtained. Geomorphology of the region is to
be clearly delineated. Study of land use patterns, habitation, cropping pattern,
and forest cover data is undertaken. Information on the location of water bodies,
drainage, forests, surface travel routes with respect to the project site is obtained
within the study area and plotted on a map. This map will show the natural
slopes and the drainage patterns, which give a guideline while planning the
drains in the airport project. The drains help in discharge of storm water from
the airport to avoid flooding and water logging in the project area.
3.Water Environment
Ambient air quality (AAQ) is important for the airport projects. The
significance of aviation's impact on air quality will vary depending on
many other factors such as, background pollution levels, other sources
of pollution, weather and proximity of residential areas. Around many
airports some large emission sources already exist (power stations,
factories) that are not related to the airport at all. Also local roads and
motorways, even roads associated with an airport, may be heavily used
by non-airport traffic.
The ambient air quality in area with radial distance 10km. from Aerodrome
Reference Point (ARP), forms the baseline information. For new airport
development, the sources of air pollution, for baseline studies are vehicular
traffic, dust arising from unpaved village roads, domestic fuel burning and
nearby industrial air emissions. For expansion / modernisation projects,
additional pollutants include the airside and geographic sources in the airfield.
5.Meteorological Data
6.Noise Environment
7.Biological Environment
Rajiv Gandhi International Airport (RGIA) has won the Best Cargo Airport and
Best Cargo Terminal of the Year award. Mr. Vikram Jaisinghani,CEO of GMR
Hyderabad International Airport Limited which operates RGIA said in a
statement that it was an honour and a prestigious moment for RGIA and he
added: The award further motivates us to achieve many more milestones
towards our vision of transforming RGIA into a logistic hub of India.
The Air Cargo Agents Association of India (ACAAI) is the only National
Association representing the Air cargo industry in India. Formed in 1970, it has
now about 278 Active members, 298 Associate members, 42 Allied members.
Apart from the common obligation of all associations, namely, protecting the
interests of the members, the Association gives professional assistance and
guidance both to its members and to various Central and State departments
CHAPTER-6
6.1CONCLUSION:
PPPs combine the skills and resources of both the public and private sectors
through sharing of risks and responsibilities. This enables governments to
benefit from the expertise of the private sector, and allows them to focus instead
on policy, planning and regulation by delegating day-to-day operations.
In India, airports were totally owned and managed by central government or the
armed forces. The Airport Authority of India (AAI), a body functioning under
the Ministry of Civil Aviation was responsible for managing the airports in
India. In 2000, there were 117 usable airports (including 26 civilian enclaves
maintained by the military) in India, which according to ICAO (International
Civil Aviation Organisation) was more than China, which had 76 airports. Out
of these, scheduled commercial operations were made only to 61 airports.
6.2REFERENCES
www.makeinindia.com
www.pppinindia.com
indianexpress.com
articles.economictimes.indiatimes.com
ppp.worldbank.org