Public-Private Partnership (PPP)

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PUBLIC-PRIVATE

PARTNERSHIP (PPP)
PRESENTED BY:SOMYA SHUKLA
57

OVERVIEW
Public Private Partnership means an arrangement between a
government / statutory entity / government owned entity on one side
and a private sector entity on the other, for the provision of public
assets and/or public services, through investments being made and/or
management being undertaken by the private sector entity, for a
specified period of time, where there is well defined allocation of risk
between the private sector and the public entity and the private entity
receives performance linked payments that conform (or are
benchmarked) to specified and pre-determined performance
standards, measurable by the public entity or its representative.
IMF (2004)the transfer to the private sector of investment projects
that traditionally have been executed or financed by the public sector

ESSENTIAL CONDITIONS
Arrangement with private sector entity
Public asset or service for public benefit
Investments being made by and/or management
undertaken by the private sector entity

Operations or management for a specified period


Risk sharing with the private sector
Performance linked payments
Conformance to performance standards

EVOLUTION OF PPPS

CURRENT STATUS OF PPPS IN INDIA


According to the Department of Economic Affairs (DEA),
around 758 PPP projects with a total value of USD71.7 is
awarded/underway status (i.e., in operational, constructional
or in stages wherein at least construction/implementation is
imminent). There exists significant untapped potential for the
use of the PPP model in e-governance, health and education
sectors.
Karnataka, Andhra Pradesh and Madhya Pradesh are the
leading states in terms of number and value of PPP projects.
At the center level National Highway Authority Of India (NHAI)
is the leading user of the PPP model.

PPP MODELS ACROSS SECTORS


With growing acceptance of the PPP concept in large scale
investments, respective government have formulated specific
PPP models addressing the needs of different sectors. Overall,
a PPP model requires private sector participation for design,
construction, operating, maintaining and finance. However,
control of the asset under contract vests with the public entity
during the contract period and once the project is complete,
entire ownership is transferred to public entity.

Schemes and Modalities of PPP


SCHEMES

MODALITIES

Build-own-operate (BOO)
Build-develop-operate (BDO)
Design-construct-managefinance (DCMF)

The private sector designs, builds, owns,


develops, operates and manages an asset with
no obligation to transfer ownership to the
government. These are variants of design-buildfinance-operate (DBFO) schemes.

Buy-build-operate (BBO)
Lease-develop-operate (LDO)
Wrap-around addition (WAA)

The private sector buys or leases an existing


asset from the Government, renovates,
modernizes, and/ or expands it, and then
operates the asset, again with no obligation to
transfer ownership back to the Government.

Build-operate-transfer (BOT)
The private sector designs and builds an asset,
Build-own-operate-transfer
operates it, and then transfers it to the
(BOOT)
Government when the operating contract ends,
Build-rent-own-transfer (BROT)
or at some other pre-specified time. The private
Build-lease-operate-transfer
partner may subsequently rent or lease the asset
Source:Public
Private
Partnership,
Fiscalthe
Affairs
Department of the IMF.
(BLOT)
from
Government.
Build-transfer-operate (BTO)

PPP MODELS IN INDIA

OPPORTUNITY TO BENEFIT FROM UNTAPPED FAST GROWING INDIAN


SECTORS THROUGH PPP

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