Govt Eyes Revamped PPP Model To Attract Investment In Capital-Intensive Infra Projects

The Finance Ministry is reportedly planning to release a new structure for public-private partnerships (PPP) and a model agreement for concessions (MCA) for multiple sectors in FY24.

These plans aim to enhance the attractiveness of capital-intensive infrastructure initiatives, emphasising their 'viability and bankability' to attract investment.

The aim is to improve the status of sectors like urban infrastructure, railways, and roads, where private participation is inadequate or hasn't reached the full potential, according to a senior official cited by Economic Times.

The proposed MCA framework will be a standard reference document for various infrastructure departments and state-run entities, allowing them flexibility to add specific clauses for their sectors.

The official said that private capital and bank credit are bound to be attracted to viable and bankable infrastructure projects. Therefore, there is a focus on structuring projects to generate revenue and stand on their own.

India needs to invest an average of $56 billion per year, totaling $840 billion over the next 15 years, into urban infrastructure to accommodate the needs of its rapidly growing urban population, as per a report by the World Bank in November 2022.

PPP framework is reportedly likely to lack incentive structure but may get initial government support for select projects in some sectors to make them viable.

Metro projects in cities like Bengaluru, Hyderabad, and Pune are being studied, with a focus on different models.

To entice investors, these metro projects are accompanied by developed real estate, creating a steady source of income.

Investors can avail of naming and advertising rights, commercial space, and other benefits from Bangalore Metro Rail Corp for about Rs 100 crore.

User charges in certain sectors can also attract private investors, as it has worked well for as telecom, port and airports in the past.