What is the new PPP project process announced by FM Nirmala Sitharaman?

The PPP (Public Private Partnership) Projects in India have provided mixed results. The country had faced problems in regards to land acquisitions, overextended balance sheet, contract disputed and lack of a mechanism for the resolution of disputes.

Certain projects have left the large public sector banks to end up with bad loans. However, the Finance Minister has announced a new policy to fasten the PPP projects. In this article let’s look at the new project announced by the government.

PPP Projects – Latest News
What are PPP Projects?
The New PPP Policy
Other Details about PPP
Assets that will be covered in PPP
FAQ

PPP Projects – Latest News

The Finance Minister of the country, Nirmala Sitharaman on 28 June 2021 had conveyed a new simpler and more efficient and effective approval process for the PPP projects as well as financing of the core infrastructure projects that will be formulated in the country.

This new formulation will help the CPSEs (Central public sector enterprises) to fasten up the asset monetization. The Finance Minister announcing various economic relief measures had conveyed that the current measure requires a lot of approvals for Public Private Partnership projects and was really long.

What are PPP Projects?

PPP projects are the process where the public services are delivered by the private entities which are awarded through a competitive bidding process. These projects are typically run on the lines where the private entity would build it, operate it for some time and later transfer it.

This method of undertaking the projects is favored by various Governments on a global basis as it makes up for the shortfall of the investments the Government of a particular country can undertake.

Experts convey that the PPP strategy holds promise for the creation of infrastructure if the financing sector is tied up.

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The New PPP Policy

The new policy for the approval and the appraisal of the public private partnership proposals and financing of the core infrastructure projects, including the one through InvITs (Infrastructure Investment Trusts) is aimed at providing and assurance for a faster way towards clearance of projects and to provide support and facilitate the efficiencies of private sector in regards to monetize construction and the management of the infrastructure.

Nirmala Sitharaman added that, this new policy will help in moving ahead with the proposal of budget regarding the financing of assets.

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Other Details about PPP

T V Somanathan, who is the expenditure secretary has conveyed that the further details of the project will be announced by the Department of Economic Affairs. In the Budget Speech of 2021-22, Nirmala Sitharaman had announced that operating the public infrastructure assets is a very important financing operation for the new construction.

She had stated that there would be a launch of a national monetization pipeline of a potential brownfield infrastructure asset.

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Assets that will be covered in PPP

Some of the core infrastructure assets that will be covered under the asset financing programme are the toll roads that are operated by NHAI, transmission assets of the PGCIL, the oil and gas pipeline of GAIL, HPCL and IOCL, AAI airports in the tier II and tier III cities.

The other core infrastructure assets included under this programme are railway infrastructure assets, sports stadiums, warehousing assets of the Central Public Sector Enterprises such as the Central Warehousing Corporation and NAFED.

Conclusion

The new PPP project policy that is stated by the Finance Minister seems to have scope for undertaking a fast track on completing the infrastructure projects and to facilitate the efficiency of private sectors in regards to monetization on the projects.

FAQ

How do PPP projects work?

Public-private partnerships allow large-scale government projects, such as roads, bridges, or hospitals, to be completed with private funding.

What does PPP mean?

Public-private partnership (PPP), partnership between an agency of the government and the private sector in the delivery of goods or services to the public.

How many active PPP projects are there in India?

There are around 1,069 active PPP Projects in India.