The government is emphasizing on Public-Private Partnerships to take Jammu and Kashmir out of financial mess. But it needs to be careful while implementing the policies.
BILAL HUSSAIN
The Public Private Partnerships [PPP] is a buzz word, the state politicians, policy makers, and private players are betrothed with these days. No doubt, the PPP can play a positive role in the economic development of Jammu and
Kashmir, however, it is not ‘the solution’ as perceived by the top elected officials of the state.
While high-rung administrators of state are busy drafting the ‘policy document’ for implementation of PPP in J&K, private players too are engrossed in proposal formulation to enter into high profile partnerships with the public sector.
Advocates of public private partnerships over here are generally looking at near-term performance efficiencies for government in the form of cost reduction and enhanced service quality. However, critics associate government privatization with an erosion of traditional public-service values, such as commitments to equity, due process, ethics, and accountability in government. Both perspectives to some extent support the initial privatization decision. However, there is a need to properly guide the public managers, once the policy makers opt for such ventures.
The purpose is not to debate the pros and cons of privatization [PPP], but to assist public managers in recognizing the strategic nuances of complex and sophisticated privatization games. So far as governance will continue to entail such public private interfaces (for better or worse), effective public partners will rely more on mastery of strategy for ongoing negotiation than on conventional processes to channel these relationships. The partnership, according to the logic, should be crafted to fit its particular circumstances. In other words, cookie-cutter approaches are neither available nor appropriate.
In recent development in the state, the government is drawing individuals from the private and public sectors together to review government operations. The committee would perform their duties with much fanfare and acclaim, and would be producing volumes of reports and countless recommendations to rein in government expenditures. All too often, the only lasting result has been a legacy of unrealistic expectations and unfulfilled promises.
Looking at PPP through other dimension, the characteristics it has are related to the different missions of private organizations compared to the missions of public organizations. The differences in the missions are also reflected in the way in which each organization is financed and governed, such as differences between bureaucratic, hierarchical organizations and entrepreneurial organizations with flatter decision-making structures. PPP is therefore different from cooperation between all public or all private entities. I hope, the cabinet sub-committee to formulate PPP policy would take due cognizance of these small but critical intricacies involved in these kinds of partnerships.
Another significant difference between the public sector and the private sector is the special powers of governmental organizations. Unlike the private sector, which relies on persuasion, the public sector can force compliance with its plans. The law and related policies, when followed, work to ensure that important government decisions are made in public and are subject to guidelines to ensure fairness, because powers of coercion can easily be abused.
Take the case of Public Sector Enterprises which have generally been in red for about past two decades. The state government has been providing some budgetary support to supplement the revenue of these corporations for payment of wages. There are pending arrears of wages as well as statutory liabilities. About two years back state government notified a VRS/GHS for the employees of PSUs and has even provided financial support for its implementation so as to help reduce the wage bill of these corporations. A support of Rs 34.32 crore has been provided for the purpose upto 2008-09 for meeting cost of VRS/GHS of 752 employees and the process is on. The need is to advocate disinvestment of the loss making PSUs. But it has to be made clear that only locals should be involved in the divestment process.
In a recent development, Chief Minister, Omar Abdullah has asked the private players in trade and business to play active role in giving fillip to the efforts of the Government for encouraging Public Private Partnership in the State.
“The task cannot be left only for Government to accomplish. You have to play your role effectively to break the ice in evolving a strategy to attract private investors to invest in joint ventures”, he said and laid stress on identifying small and medium projects in the sectors of education, health and sanitation under PPP mode.
To make a mention, the state government has already constituted a cabinet sub-committee to formulate a sound and effective PPP policy so that investors from outside the State are attracted to be part of the joint ventures between local private business players and the government.
The government has recently decided to explore PPP possibilities for execution of Rs 400 crore tunnel between Vailoo and Singhpora to provide all weather connectivity between the Kishtwar in Jammu Region and the valley. The project report for its implementation in PPP mode has been prepared. Report preparation is fine but the state government needs to be careful enough while dealing with the private entities as their main motive most of the times is to mint money.
According to the recent report of the Comptroller and Auditor General of India for the year ended March 31, 2009 the state government's compliance with various rules, procedures and directives was unsatisfactory as is evident from delays in finishing of utilization certificates against the loans and grants from various institutions. There was also delay in submission of annual accounts by some autonomous bodies. Accounts of Ladakh Autonomous Hill District Councils', Leh and Kargil have not been prepared since their formation. Where public sector is itself in shambles, would PPP be a feasible option to go ahead with? Or rather isn’t that the state should be working on capacity building of local private players to have more public listed companies from the state like the Jammu and Kashmir Bank.
The Public-private partnerships can be effective in reshaping government operations. To be successful, there must be well defined, focused missions, careful to public managers with private sector executives sharing common skills, and well supported by the executive who seeks to benefit from them. It is possible to make government work better. Nonetheless, the challenge remains great and the process continual.
BLURB: Perspectives of both the advocates and critics of PPP, to some extent, support the initial privatization decision. However, there is a need to properly guide the public managers, once the policy makers opt for such ventures.
Showing posts with label public-private-partnership. Show all posts
Showing posts with label public-private-partnership. Show all posts
J&K explores PPP for Rs 400 cr tunnel for Vailoo, Singhpora
PPP model for infra development raise eyebrows in Kashmir
BILAL HUSSAIN
The public-private-partnership (PPP) as a model for the infrastructure development in Jammu and Kashmir, which would be taken by the private players with the state government has raised many eyebrows over the successful implementation of the projects under the model here.
The PPP model —long-term contractual partnership between the public and private sector agencies, specifically targeted towards financing, designing, implementing and operating infrastructure facilities and services in the state— is intended to achieve the twin objectives of high growth and equity on a sustainable basis.
Most of the states where the PPP model has done well have in-place infrastructure policy, which is not the case with J&K, economists who wished not to be named here said. “The primary objective of the infrastructure policy is to provide a fair and transparent policy framework for the facilitation of the process of economic growth and encouragement of PPP in the infrastructure sector in the state.”
The apex business chamber of the valley— Kashmir Chamber of Commerce and Industry’s (KCCI), president KCCI Nazir Ahmad Dar told Kashmir Times that the policy formulation for the infrastructure development should be the priority, which would guide the administration in a systematic way. “The need of the hour is to have the policy. We should not try to catch hold of everything and we will reach nowhere by this. Rather, we should priorities the things,” Nazir added.
Economists here believe that the need to foster such arrangements is supported by a clear understanding of the public sectors inability to provide public goods entirely on their own, in an efficient, effective and equitable manner because of lack of resources and management issues.
However, on a caution note economists told that there are complex issues in the arrangements that bring together varied players with different and sometimes conflicting interests and objectives working within different governance structures, which is a measure drawback in the model.
“PPP projects have seen mixed success in south India. Success stories include Hyderabad, Bangalore Airport and NHAI projects. The BMIC (Bangalore-Mysore Infrastructure corridor) experience, however, hasn't been successful,” quoting a report he said. The state should learn from these experiences and accordingly devise the policy to make PPP a success in the state, he said.
The valley Industrialist chamber, Federation Chamber of Industries Kashmir’s president Shakeel Qalander told Kashmir Times that the PPP model is one of the modes of doing the infrastructure work, ‘it is a welcome step.’ Some equity would be given by the government and rest would be contributed by the private sector, he said.
In other states like Rajasthan, have well developed roads and most of these roads are developed on the PPP basis. The private players collect toll fee after almost tens of kilometres, which they use for the road maintenance. “Public wouldn’t mind paying extra bucks to get quality infrastructure,” he believes.
The state should develop infrastructure by replicating and tailoring the successful models in other states of India. “We need to reproduce the model in rest of the projects in the state and get quality infrastructure. Involvement of private sector in the road development is the need of the hour.”
To mention, the state government has recently decided to explore PPP possibilities for execution of Rs 400 crore tunnel between Vailoo and Singhpora to provide all weather connectivity between the district of Kishtwar in Jammu region with the valley. The project report for its implementation in PPP mode has been prepared.
Another project to be developed on the PPP mode is four laning and up-gradation of the Highway from Lakhanpur to Srinagar is also progressing with good pace. The entire length has been divided into six segments. All these segments of the highway between Nagrota and Qazigund have been approved by the New Delhi for execution under PPP mode at a cost of Rs 9,700 crore.
While, the government is also encouraging establishment of backyard poultry units for which the department is gearing-up its production for supply of low tech poultry birds from the departmental hatcheries to the BPL families. The Department is working on a PPP initiative for developing hi-tech parent stock.
The state is mulling project of parking sites that need to be developed in both the cities, Jammu and Srinagar, and more sites have been planned for execution in government sector as well as in the PPP mode.
The recent award of the of Rattle hydro project on river Chinab to the GVK Power and Infrastructure Limited (GVKPIL) for developing 690 MW Hydro Electric project was awarded on build, own operate and transfer (BOOT) —Financing arrangement in which a developer designs and builds a complete project or facility (such as an airport, power plant, seaport) at little or no cost to the government or a joint venture partner, owns and operates the facility as a business for a specified period (usually 10 to 30 years) after which transfers it to the government or partner at a previously agreed-upon or market-price— basis is also a step towards PPP initiative.
BILAL HUSSAIN
The public-private-partnership (PPP) as a model for the infrastructure development in Jammu and Kashmir, which would be taken by the private players with the state government has raised many eyebrows over the successful implementation of the projects under the model here.
The PPP model —long-term contractual partnership between the public and private sector agencies, specifically targeted towards financing, designing, implementing and operating infrastructure facilities and services in the state— is intended to achieve the twin objectives of high growth and equity on a sustainable basis.
Most of the states where the PPP model has done well have in-place infrastructure policy, which is not the case with J&K, economists who wished not to be named here said. “The primary objective of the infrastructure policy is to provide a fair and transparent policy framework for the facilitation of the process of economic growth and encouragement of PPP in the infrastructure sector in the state.”
The apex business chamber of the valley— Kashmir Chamber of Commerce and Industry’s (KCCI), president KCCI Nazir Ahmad Dar told Kashmir Times that the policy formulation for the infrastructure development should be the priority, which would guide the administration in a systematic way. “The need of the hour is to have the policy. We should not try to catch hold of everything and we will reach nowhere by this. Rather, we should priorities the things,” Nazir added.
Economists here believe that the need to foster such arrangements is supported by a clear understanding of the public sectors inability to provide public goods entirely on their own, in an efficient, effective and equitable manner because of lack of resources and management issues.
However, on a caution note economists told that there are complex issues in the arrangements that bring together varied players with different and sometimes conflicting interests and objectives working within different governance structures, which is a measure drawback in the model.
“PPP projects have seen mixed success in south India. Success stories include Hyderabad, Bangalore Airport and NHAI projects. The BMIC (Bangalore-Mysore Infrastructure corridor) experience, however, hasn't been successful,” quoting a report he said. The state should learn from these experiences and accordingly devise the policy to make PPP a success in the state, he said.
The valley Industrialist chamber, Federation Chamber of Industries Kashmir’s president Shakeel Qalander told Kashmir Times that the PPP model is one of the modes of doing the infrastructure work, ‘it is a welcome step.’ Some equity would be given by the government and rest would be contributed by the private sector, he said.
In other states like Rajasthan, have well developed roads and most of these roads are developed on the PPP basis. The private players collect toll fee after almost tens of kilometres, which they use for the road maintenance. “Public wouldn’t mind paying extra bucks to get quality infrastructure,” he believes.
The state should develop infrastructure by replicating and tailoring the successful models in other states of India. “We need to reproduce the model in rest of the projects in the state and get quality infrastructure. Involvement of private sector in the road development is the need of the hour.”
To mention, the state government has recently decided to explore PPP possibilities for execution of Rs 400 crore tunnel between Vailoo and Singhpora to provide all weather connectivity between the district of Kishtwar in Jammu region with the valley. The project report for its implementation in PPP mode has been prepared.
Another project to be developed on the PPP mode is four laning and up-gradation of the Highway from Lakhanpur to Srinagar is also progressing with good pace. The entire length has been divided into six segments. All these segments of the highway between Nagrota and Qazigund have been approved by the New Delhi for execution under PPP mode at a cost of Rs 9,700 crore.
While, the government is also encouraging establishment of backyard poultry units for which the department is gearing-up its production for supply of low tech poultry birds from the departmental hatcheries to the BPL families. The Department is working on a PPP initiative for developing hi-tech parent stock.
The state is mulling project of parking sites that need to be developed in both the cities, Jammu and Srinagar, and more sites have been planned for execution in government sector as well as in the PPP mode.
The recent award of the of Rattle hydro project on river Chinab to the GVK Power and Infrastructure Limited (GVKPIL) for developing 690 MW Hydro Electric project was awarded on build, own operate and transfer (BOOT) —Financing arrangement in which a developer designs and builds a complete project or facility (such as an airport, power plant, seaport) at little or no cost to the government or a joint venture partner, owns and operates the facility as a business for a specified period (usually 10 to 30 years) after which transfers it to the government or partner at a previously agreed-upon or market-price— basis is also a step towards PPP initiative.
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