New Delhi: From maintenance of public spaces to redevelopment of housing projects, urban local bodies in India, which are mostly cash-strapped, are experimenting with new ideas to improve their services through private investment under the Public Private Partnership (PPP) model.
There is, however, “low uptake of PPP projects” in the urban areas of cities because of poor planning, lack of institutional capacity of urban local bodies and low tax collections.
According to India Infrastructure Report 2023 on urban development and planning, released this week, just around 10 percent (188) of the 1,823 PPP projects listed on the Department of Economic Affairs (DEA) website (as of 2019) are in urban areas of cities.
Currently, the majority of PPP projects are in sectors such as highways, roads, bridges, ports, energy, and telecommunications, among others.
Of the 10 percent PPP projects in urban areas, the majority are in the urban transport sector (38 percent), followed by the municipal solid waste sector (37 percent) and water supply and sewage sector (25 percent).
Projects related to public toilets and streetlights, two key responsibilities of civic bodies, did not find mention in the DEA’s list of PPP projects, according to the report.
This is when the majority of urban local bodies in the country are facing financial constraints and are largely dependent on central and state government funding.
Urban development experts stress the need to strengthen regulatory framework and improve the capacity of urban local bodies to ensure better planning of PPP projects, especially in different sectors.
“There are multiple issues with PPP. Most urban local bodies, especially in small cities, don’t have the capacity to prepare comprehensive PPP documents. In long-term PPP projects, such as for 20-30 years, especially where prime land is involved, it is difficult to assess financial viability,” said a senior official with the New Delhi Municipal Council (NDMC), which is one of the few cash-rich local bodies in India.
The NDMC has taken up very few projects on PPP basis, such as multi-level parking, cycle-sharing projects etc.
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Status of PPP projects
The India Infrastructure Report 2023 analysed PPP projects, costing above Rs 5 crore, implemented in urban areas.
According to the report, when it comes to distribution of PPP projects across states in terms of quantity and value, north and central India combined emerged as clear leaders in both aspects, accounting for a total of 83 projects worth Rs 30,446.94 crore.
“Western India follows at second place with 53 projects valued at Rs 23,210.27 crore. Notably, these two regions (north and central, and west) account for almost 77.56 percent of the total value of all PPP projects,” said the report. In contrast, states in eastern India have the lowest number of PPP projects — only 14, amounting to Rs 1,667.30 crore.
“In South India, Karnataka tops the list with 15 projects, while Tamil Nadu and Telangana follow with 9 and 7 projects, respectively. On the other hand, West Bengal leads in the East with 7 projects, whereas Jharkhand and Assam have 2 and 1 projects, respectively,” the report added.
In terms of distribution of PPP projects across states, “Gujarat ranks first with 33 projects, while Uttar Pradesh and Maharashtra follow closely with 18 and 17 projects, respectively”.
According to data provided in the report, Gujarat has the most number of projects in urban transport, followed by Himachal Pradesh and Punjab.
Roadblocks
Of the 188 projects in urban areas, 37.77 percent are urban transport projects, followed by solid waste management projects (36.70 percent).
Water supply pipeline and sewage collection projects account for 11 percent each, while the figure for water treatment plants is quite low at under 4 percent, according to the report.
Maintenance of toilets and streetlights, both key components of municipal services, was been taken up under PPP by the majority of urban local bodies, it noted.
The reasons behind lower urban uptake of PPP projects, according to the report, include “inadequate regulatory frameworks and legal frameworks to concerns about transparency, accountability, and social impact”.
In 2010-11, Delhi’s civic body had taken up some projects, especially related to maintenance of public toilets, on PPP basis. K.S. Mehra, the then MCD commissioner, told ThePrint: “Some of the projects ended up in courts as the private players were not performing. The biggest challenge is in monitoring the work done by private partners.”
Bid to overcome challenges
Some urban local bodies are attempting to put in place systems such as hiring consultants to prepare and evaluate PPP agreements and framing sector-specific policies to overcome the challenges faced in execution of PPP projects.
Speaking to ThePrint, Indore municipal commissioner Harshika Singh said the corporation had put in place a mechanism to ensure the success of PPP projects, especially those concerned with essential services.
“We have taken up several projects on PPP basis, not just in road infrastructure but also in maintenance of services. We have outsourced toilet maintenance, big gardens, parks, etc. They (private players) are given space for advertising and in some places to run a café so that they can recover the cost. For maintenance of toilets, we have provided treated water,” she said.
India Infrastructure Report 2023 also underlines how issues related to land acquisition, lack of suitable models for PPPs in the complex urban services sector, low scope for tariff increase until services improve significantly, and above all, low capability of urban local bodies, even those of major cities, have stood in the way of PPP projects.
“In the Indian urban PPP context, success of PPP projects largely depends on governance and institutional aspects, effective procurement and contracting mechanisms, adherence to relevant legislations, and the use of appropriate revenue models,” the report added.
To overcome the hurdles in the implementation of PPP projects, the Surat Municipal Corporation has come up with sector-specific policies for PPP. Shalini Agarwal, commissioner, Surat Municipal Corporation, told ThePrint that PPP was the way forward.
“We have taken up several projects on PPP basis, including tenement redevelopment in Dumbhal for 900 public housing units provided to the urban poor. We have taken up three more such projects,” she said.
Agarwal added, “We have prepared sector-specific policies for PPP before inviting expression of interest from private players. The policy clearly spells out the terms and conditions and scope of work of the private player. We have PPP for maintenance of traffic islands and roundabouts, tenement redevelopment, maintenance of water bodies, parks, redesigning of roads, etc.”
Further, the report also recommended that procurement documentation should be prepared in an effective way to encourage increased participation by the private sector.
“The documentation should contain the rights and obligations of the parties in an unambiguous and clear manner so that the risks are allocated equitably…revenue streams for the private sector should be ensured, and regulations and policies should provide a clear framework for charging tariffs,” it added.
(Edited by Nida Fatima Siddiqui)
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