The Punjab Infrastructure Development Board (PIDB) has many lessons for managing PPPs at the state-level.
When it comes to infrastructure investments, the 11th Plan has two basic expectations. One, state governments are expected to fund and implement $149 billion of the plan target of $492 billion, i.e. 30 per cent. Two, Public Private Partnerships (PPP) are expected to fund around 30 per cent of the overall plan. Evidently the country has no choice but to give a major fillip to the PPP movement at the state-level.
The states which have stood out in terms of PPP as far as infrastructure is concerned are Gujarat, Maharashtra and Punjab. While the first two are well-known when it comes to attracting investment, it is Punjab’s approach that deserves a closer look. What are the distinctive elements of the Punjab Infrastructure Development Board (PIDB) experience?
One, the projects chosen cover a wide spectrum across core and social infrastructure. That makes the appeal quite broad-based. The PPP projects that have been developed include: 11 roads ( 650 kms); three polytechnics and nine ITIs, three bus terminals (Amritsar, Jalandhar and Ludhiana), operation and maintenance of eight bus terminals and city-bus services in two cities. Projects recently awarded include fully air-conditioned bus-terminal-cum-commercial complexes at Mohali and Patiala, the Punjab Institute of Medical Sciences at Jalandhar, super-speciality hospitals at Mohali and Bhatinda, a five-star hotel at Bhatinda and polytechnics at Nanowal and Rahon, flying-training institutes at Amritsar and Ludhiana and a parking project at Bhatinda. Projects that are in the pipeline include two greenfield expressways (Mohali-Phagwara and Pathankot-Ajmer), ring roads around Ludhiana and Amritsar, a metro-rail project in Ludhiana, a mono-rail transport system in Amritsar, a sports complex at Mohali, six BOT roads, four high-level bridges, a cricket stadium at Bhatinda, hotels at Amritsar and Mohali, multi-level car parks at Ludhiana and Bhatinda, fruit and vegetable markets at Mohali, an Institute of Hotel Management at Bhootgarh and Sirhind, Punjab di Train, and a host of tourist complexes.
Two, PIDB governance structure has been designed to be practical, clear and result-oriented. PIDB was set up in 1998 by enacting ‘The Punjab Infrastructure Development Bill, 1998’. A new Act, built on four years of PPP experience, known as ‘The Punjab Infrastructure (Development and Regulation) Act, 2002’ removed the limitations of the earlier Act. It now provides clear operating guidelines pertaining to projects and concessionaires; the legal basis for grant of concessions; structures of public-private participation; safeguarding interests of stakeholders, and dispute-resolution mechanisms.
Three, it draws sanction and power from the highest levels. PIDB is a high-powered body with the chief minister as the chairman and the finance minister as the vice-chairman. The composition of the Board includes the chief secretary, the principal secretary to the chief minister, the principal secretary -finance (as the convener), and the managing director of PIDB. Ministers and secretaries of concerned departments participate as special invitees. The Board has delegated most of its power to the executive committee. The executive committee comprises of the chief secretary as the chairman with the PIDB’s managing director as the convener.
Four, it has lean permanent staff. The structure consists of a chief general manager, a chief legal advisor and a technical advisor and is headed by the managing director of PIDB. It has been able to achieve this by retaining the services of two leading project development consultants on an ongoing basis — Infrastructure Leasing & Financial Services (IL&FS) and Feedback Ventures.
More From This Section
Five, the state government has consistently hand-picked some of its best officers to head PIDB. Over and above the indefatigable and highly resulted-oriented current MD — S S Sandhu — ex-MDs have included stalwarts like Vini Mahajan (now in the PMO), Ravneet Kaur (now in the Ministry of Finance), and Karan A Singh [Punjab State Industrial Development Corporation’s (PSIDC) MD).
Six, it has been allowed to access off-budgetary and market-funding. The PIDB is thus one of the very few organisations which, in its own right, has a regular stream of revenues captured in the mirror-imaged Punjab Infrastructure Development Fund (PIDF). A fee of one rupee per litre on petrol, and a 3 per cent cess on agricultural produce is escrowed with PIDF. The fund received over Rs 500 crore in 2008-09 and is likely to cross Rs 800 crore in 2009-10. In addition, PIDB also earns through revenue-share arrangements with various PPP projects. An innovative scheme to earn money is the sale of unutilised government land under the OUVGL (Optimum Utilisation of Vacant Government Lands) scheme. The entire proceeds realised from the commercial exploitation of such properties are directly credited to PIDF. PIDB has also tapped the market with four series of bonds to meet its project-funding requirements. These unsecured, redeemable, non-convertible bonds currently total up to Rs 1,550 crore.
Seven, while focusing on PPP on one hand, PIDB is also allowed to leverage its financial and technical strengths and play a key role in structuring and financing EPC (Engineering, Procurement and Construction) bids under public expenditure.
Eight, by issuing the ‘Unsolicited Proposal Bye-Laws 2008’, PIDB can deal with unsolicited proposals. The provisions here include acceptance of unsolicited proposals, purchase of proposals, processing fee, security, finality of decision, rights of proposer, etc.
Nine, by clearly and fairly demarcating the work allocation of a project across project-structuring, bidding and subsequent execution, PIDB has been able to minimise the turf issues endemic to public agencies.
Ten, from 1998, PIDB has shown consistent robustness of operations across various political dispensations — it has got a positive buy-in from both the Akali Dal and the Congress.
Going forward, is there a case for further improvements and innovations? My colleague, A D S Virk, who has Punjab infrastructure in his bones now, has helped me think through some of the refinements. These are:
- Inclusion of urban utilities like solid waste, water supply, sanitation and electricity distribution in the PPP process.
- Encompassing rural projects such as cold chains, irrigation, power distribution franchising, possibly through an annuity mode.
- Allowing PIDB to act like a single-window for various approvals from different state and central agencies such as environment, forests, viability gap etc.
- Utilising other PPP models such as joint venture and annuity, particularly in current market conditions.
- Tapping funds from multilateral institutions.
Greater receptivity to stakeholders’ viewpoints at the time of conceptualisation.
Finally, considering the setting up of the Punjab Infrastructure Regulatory Authority (PIRA), as provided under the PIDB Act, for ensuring a level playing-field for all stakeholders.
In conclusion, it has to be said that a land-locked state in north India is demonstrating great energy, fresh thinking and political and administrative dynamism in pushing the PPP agenda — this is something for many other states to think about.
The author is the Chairman of Feedback Ventures. He is also the Chairman of CII’s National Council on Infrastructure. Views expressed here are personal