One of they key reasons for developers failing to secure finances is the reluctance of banks in funding HAM projects. Banks have been trying to reduce their exposure in the highways sector.
They had many stuck BOT projects due to which they have termed roads as a risky sector which is not the case. If you look at it otherwise, HAM is a very clean model where the payment guarantee is given by the government. According to data reviewed by Hindustan Times, 64 projects out of total projects awarded under the hybrid annuity model HAM have failed to take off because they have not received financial closure.
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Report card: Vodafone Idea trims loss; Arpu improves in Q2. Driving growth: FM Nirmala Sitharaman to brainstorm with chief ministers and state finance ministers. Commercial vehicle, micro loans remain pain points for lenders in Q2. Subscribe Now. Your Subscription Plan Cancel Subscription. Home India News Entertainment. HT Insight. My Account. The construction of Nagpur metro first phase started in and s expected to be completed in with a mix of elevated and at grade-level lines. The project Nagpur metro rail was conceived during the year , when the cities having a population of more than 2 million were made eligible for having a metro rail system.
NMRCL shall be solely responsible for the successful and timely completion of the project and its operations subsequently. The above analyses from section 5. Most of the projects are being involved with the state. While others are rest of ongoing projects.
For the rest of the projects for the successful procurement, author necessitates the following contributing factors and for improving the efficiency and effectiveness of the BOT legal mechanism. For instance, in the procurement of BOT projects, as the first step, GOI has amended some legal acts and permissibility on the grant of concession for projects such as road, electricity, railways, etc.
This was followed by the amended several legal acts like Land Acquisition, privatization policy in airports, ports and Foreign Direct Investment policies, etc. These acts permit the private developers to construct, operate and maintain but still, there is a lack of proper monitoring. Unfortunately, if the project is not successful or it indulges with partnering problems there are not any bridge available laws for renegotiations. While procuring the BOT projects the government is a client and it has the responsibility to facilitate the whole process.
Therefore, for the success of BOT projects risk-sharing partnerships on both parties must play active roles. For the success of the Nagpur Metro rail project, both governments should work equally. There should not be any political interference for the project completion both governments should work on hand for a long time, which could not be possible in the Indian case.
In dealing with BOT projects, the government of India has adopted the principle of a real priority project which focused on highly needed public projects.
The construction of highway roads is a good example of a real priority project. The Highways provide transportation means which is really needed for the public. Good transportation encourages industrial production and helps to boost up the local economy. Clarity of project formulation and documentation For the successful procurement of BOT projects, the project formulation and documentation must be as clear as possible.
The nature of the project formulation process depends upon the host country, sponsors and the nature of the projects. In some cases, this strategy works, but at other times it may. A perfect standard document must be adopted for every single project. Whatever be the case, the documents must be clear and transparent. In the case of the government of India, this is essentially monitored by the Economic Planning Unit EPU of the Prime Minister department which is responsible for the preparation of the Concession agreement of big infrastructure projects.
Every stage of the BOT process must be carried out in a transparent manner. Open tendering, evaluation of project capital, feasibility studies must be transparent to all parties. In a large infrastructure projects, while having one or more borders national agencies from two or more countries, it is necessary to work together to reconcile and streamline different national regulatory requirements.
Therefore, it is important to have a transparent regulatory process. For transparency regulatory legislation in certain cases, regulatory legislation in India has made provisions to guarantee a transparent regulatory process. For example, in the electricity and telecom sectors, it has been mandated that regulators should ensure transparency while exercising their powers and discharging functions.
Investments in infrastructure are large, long-term, irreversible, and domestic market dependent. Any changes in local and government policies related to these factors may adversely affect the profit of the project. While investing in Indian infrastructure lenders may react to political risks differently, with those more familiar with the setting possibly being less risk averse.
But it would be better that any BOT project should not be mixed with politics and government. Political conflicts and party conflicts may affect the project and it could result in cancellation of the project.
This is the most important factor that contributed to the success of a BOT project. The fair dealing process will benefit all parties to the BOT projects including the end-users. A good example is the highway projects, outsourcing to the private entities. The project of the ASP underground project was the combination of government, private and local entities, finally which lead the project in a successful completion.
The conditions and terms of the contract need improvement especially in relation to the companys responsibility in guaranteeing project completion, building design, and facilities. There should be investment insurance for investors to make them easy to invest in the public infrastructure sector. Conditions and terms of the concession contract need further research and renegotiations in protecting the interest of the parties. Need to avoid unnecessary financial burdens like payment level of indebtedness and compensation to the concessionaire if the estimated return, profit, and traffic volume for a certain time.
In Indian context there is a high degree of agreement among all the major BOT project participants regarding the risk allocation preference and the risk management capabilities of various stakeholders with respect delay in land acquisition. Most private participantsrated Indian government is best capable party, to reduce the days in land burrowing. Consultants and promoters prefer that Indian government should take the entire responsibility.
In most of the BOT road projects responsibility of land acquisition is within the Indian government, but non-availability of land in time is one of the headaches for private investors.
Selecting the most appropriate investors and sponsors for the projects is one of the key factors in the success of the project that takes place by the tendering process and this process of choosing investors and appropriate shareholders play the role of identifying goals, providing expected conditions for the tender, evaluating suggestions of participants in the tender, and finally negotiating and setting contract and granting the right of operating the project to the winner company Kumaraswamy and Zhang, Basically, infrastructure projects have main roles in economic growth and development of the country but since the private sector participation, various appropriate policies and legal frameworks are needed.
Without having appropriate rules and regulations the public-private partnerships may not be result in success. Therefore, for successful PPP implementation it needs a various consideration, in social, political, and economic perspectives. While procuring infrastructure projects it needs high expense, they cannot be supported only by the government budget.
So, the governments use the methods through which they can be financing the project herein by the richest private sectors. Where BOT is one of the most common methods. From the above evidence, it could be said that the government of India is welcoming the private sector participation in domestic public infrastructure development.
From the legal perspectives, GOI has amended the rules and regulations for projects deals with priority projects like toll highways, ports, railways, bridges, etc.
To answer the first research question, it could be said that the Government of India has amended several bills to make easy of the private sector participation in the countrys public infrastructure sector. In this way the Indian authorities are making conscious efforts in setting up PPP cells at state level to access project development resources, several advisory. To answer the second research question, it could be said that the Indian BOT projects are working under the BOT guidelines but still there is a lack of defined legal framework.
The above-analyzed BOT projects most of them are on the way of completion and few of them are posed to administration. The projects which have issues of lack of transparency in the procurement process, inadequate project appraisal, and unclear concession agreement should be improved to be fair and equitable to all parties. The quality assurance and standard clauses should be enhanced in protecting the interest of all parties to the contract. While concluding, it could be said that the Indian government authorities need to pay more attention to subsequent potential renegotiation, risk measurement, selection of projects.
Hence, for the successful BOT procurement in Indian public infrastructure sector, lessons should be learned from the developed countries successful BOT projects. Akbiyikli, R. Tehran, Iran: Available at, www. Chaitali, p. Cheng, C. Cruz, C. Dube, C.
Dubey, R. Ebner, G. Fan, R. Grimsey, D. Gunnigan, L.
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