Kelkar Committee on PPP model to submit report soon

Likely to suggest drastic changes in land acquisition and agreement model

The committee chaired by Kelkar to look into the ways to revive Public Private Partnership (PPP) model is expected to submit its report to the Union Finance Minister Arun Jaitely in a week or two, said S B Nayar, chairman and managing director, India Infrastructure Finance Company Ltd (IIFCL), who is a member in the committee.

The panel, headed by former finance secretary Vijay Kelkar, has been constituted earlier this year to look into and suggest reforms for the public-private partnership (PPP) model in infrastructure projects.

Delivering a speech in the United Economic Forum (UEF) Trade Summit 2015 in Chennai, he said, "We are now submitting the report next week to the Finance Minister, where we have suggested very drastic changes in the land acquisition and agreement model including arbitration procedure."

 

While the country has executed more than 1,000 projects under the PPP model, in the last two to three years, the model has collapsed because of various reasons and no investments were coming through.

There were issues in the way risk is transferred from government private sector and government probably wants more risk to be taken by the private sector. However, issues like land acquisition cannot be taken by private sector. The Committee was formed to look into the issues, he added.

"Now you have NHAI, which is concessioning and also the arbitrator. We have suggested to move it out of that concessioning system," he said. He was also member of a committee which has looked into the issues in road sector.

Speaking about the issues faced in raising funds for infrastructure development, he said that the banks would step back from the infrastructure sector with the implementation of Basel III norms.

"They will only take exposure to projects which has got rating and rating will come only after the commencement of the operations. Rating agencies will not give rating to projects under implementation. No bank would like to keep exposure for three to four years with 100 per cent equity," he said.

"We need to create more institutions and we have to enlarge the current institutions to take up these investments," he said in the sidelines of the Summit.

IIFCL is examining the opportunities in offshore bond issue, which is approved by the RBI and one has to look at it as it is a new market being created, he added.