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Requirements of administrative framework & procurement methods for public private partnership
A Case Study in Indian Highway Sector
Wednesday 26 April 2006 , Kulwinder Singh Rao


Purpose and Scope of Project Report

1.1 Public Private Participation (PPP), as a means of engaging private sector in infrastructure development, has gained increasing attention from the governments across the world. The main reasons for this universal phenomenon are as follows :
- first, the governments try to tap the activity and creativeness of the private sectors, improve efficiency and settle the ubiquitous problems of the inefficiency in the operation of infrastructure;
- second, the governments try to solve the problem of the capital shortage by means of PPP in the face of financial constraints and the decrease of investment ability;
- last, public works and public facilities could be shifted to the track of private-ownership by means of PPP.
In India too, PPP, especially in Build -Operate-Transfer (BOT) format, has emerged as preferred choice for road infrastructure development.

1.2 This report makes a general assessment of the processes involved in introduction of PPP concept in Highway sector. This report limits the focus on three elements that are important for evolving a working & efficient structure and methodology to select appropriate private partner.
The elements being first, structure of Government Team or set-up responsible for PPP programme; second, procedures involved in selection of private partner and last, evaluation methods and criterion that might be used for evaluating the bids.

1.3 This report has been prepared as a part of CESROUTE programme at Ecole Nationale des Ponts et Chaussées (ENPC), Paris. The overall approach followed in the report is informative rather than prescriptive.

1.4 It has been author’s objective to use this report to flag pertinent contextual issues that might need special consideration and attention in the course of adopting the BOT model successfully in India and particularly in Punjab. Accordingly, a summary assessment of the current state of affairs for both Punjab as well as federal level in respect of prevailing structures and procedures relating to BOT projects has been attempted.

1.5 This report is based on
- (1) literature review
- (2) interviewing of key technical officials in the French road administration and Industry
- (3) interaction with technical experts in Indian consulting industry
- (4) interaction with key technical officials of NHAI1 and
- (5) case studies.

Structure of Project Report

1.6 The structure of Project Report is as follows:


- Section One- describes the purpose, scope & structure of this report.
- Section Two- is the general review of Public Private Partnership (PPP), related issues, PPP phenomenon in global highway sector. The extent of PPP in highway sector in India and Punjab has been briefed to give the contextual reference to this report.
- Section Three- deals with the administrative framework requirements in government agencies involved in bringing private sector participation in public infrastructure. A review of NHAI (at all India level) and PIDB2 (at Punjab level) organization structures is made and possible new structures have been proposed.
- Section Four- briefs the objectives of public procurement and various selection procedures for successful PPP procurement. A review of procedures being followed at India level and in Punjab for PPP in road projects has been done. The section ends with the possible improvements in such procedures at the federal level as well as state level.
- Section Five- details various bid evaluation criteria that are adopted for highway concessions. Various technical and financial criteria adopted by NHAI and Punjab at the prequalification & bidding stage are described, and a possible format for bidding for road projects (least-present-value-of-revenues or LPVR) is described briefly for adoption in Punjab PPP initiative.

1.6 The final section provides the summary of main conclusions and recommendations postulated in this report.


to download the report (1,9 Mo)

Administrative Framework & Procurement Methods For Public Private Partnership - A Case Study in Indian Highway Sector

Acknowledgements

I wish to acknowledge the help, guidance and advice given by my tutor: Mr Alain Fayard, Inspecteur Général de l’équipement, Ministère de l’équipement, des transports, de l’aménagement du territoire, du tourisme et de la mer, France in completing this project report. However, I do own the full responsibility for the information, views, inferences & opinions expressed in this report and these may in no way be construed to be the views of my tutor or Ecole Nationale des Ponts et Chaussées (ENPC).

Thanks are also due to Ms Malika Seddi of ASFA who helped me to understand the French experience in PPP and provided useful statistics. Similarly, Ms Bienvenida A. Firmalino, Assistant Project Director of Department of Public Works & Highways, Philippines provided all data related to Philippines experience, which is duly acknowledged.

I also wish to thank Dr M P Raju and Mr. Avadesh Singh of Lea Associates South East Asia Private Limited who greatly helped me in this endeavor by providing necessary insights into Indian highway scenario.

Finally, I express my gratitude to all the persons at ISTED (especially M. Armand der Stepanian), Metratech and ENPC who helped me to complete my CESROUTE program, in general, and this report in particular.

Contents

I- INTRODUCTION


- Purpose and Scope of Project Report
- Structure of Project Report

II PUBLIC PRIVATE PARTNERSHIPS


- Reasons for Choosing PPP
- Types of PPP
- Contracts or Concession Agreements used in PPP
- Role of public and private partners in PPP
- Requirements for a successful PPP programme
- Indian Scenario
- Punjab Scenario

III STRUCTURE OF TASK TEAM FOR PPP


- Management approach to Task Team
- Level of Decentralisation in Government
- Requirements of a Task Team
- Different Formats for Task Team
- French Road Administration Model
- Philippines Road Administration Model
- Outsourcing vs. In-house Capacity Building
- PPP Team Structure in NHAI
- PPP Team Structure In Punjab
- Suggestive Enhancing Measures for NHAI
- Suggestive Enhancing Measures in Punjab

IV SELECTION PROCEDURES


- Purpose of Selection Procedures in PPP Procurement
- Types of Selection Procedures
- Special Features Relating to PPP Procurement
- Procedures
- Other Related Issues
- Bidding Rules & Procedures
- Selection Procedures followed at NHAI
- Selection Procedures adopted in Punjab
- Suggested Improvements in NHAI Procedures
- Suggested Improvements in Punjab selection methods

V BID EVALUATION CRITERIA


- Types of Tender Evaluation Methods
- Evaluation Criteria during Prequalification process
- Evaluation Criteria during Final Bidding Stage
- Tender Evaluation Criteria used in NHAI
- Prequalification Stage
- Bidding (Proposal) Stage
- Tender Evaluation Criteria used in Punjab
- Suggested Improvements in NHAI process
- Suggested criteria for Punjab

VI CONCLUSION AND RECOMMENDATIONS

APPENDICES


- Annex A NHDP-Private Sector Projects
- Annex B List of Post NHDP Projects
- Annex C List of BOT Road Corridors in Punjab
- Annex D List of French Toll Road Operators
- Annex E Organigramme of French Road Directorate
- Annex F NHAI Organisation Chart
- Annex G Organisation Chart of Philippines BOT office
- Annex H List of Minimum Machinery for NHAI BOT Projects
- Annex I List of Minimum Personnel for NHAI BOT Projects

List of Figures

- Figure 1: Types of PPP
- Figure 2: Investment in road projects with private participation in developing and transition countries by project type, 1990-2003
- Figure 3: Road projects with private participation in developing and transition countries that reached financial closure, 1990-2003
- Figure 4: Relationship of Numerous Players in a Typical PPP Project
- Figure 5: Role of Public & Private Partner during a life cycle of PPP Project
- Figure 6: Public Private Route Partnership Map
- Figure 7: NHDP Project Map
- Figure 8: French Government Organisation & Concessionaires
- Figure 9: BOT Unit in NHAI
- Figure 10: Organisation structure for BOT program in PIDB
- Figure 11: Proposed Organization Structure for BOT Unit in NHAI
- Figure 12: Proposed Organization Chart for BOT Unit for Road Works in PRBDB
- Figure 13: Government & Private Sector Objectives in PPP procurement
- Figure 14: Overview of Restricted Procedure for PPP procurement
- Figure 15: Overview of Negotiated Procedure for PPP Procurement
- Figure 16: Objectives of Evaluation Criteria

List of Tables

- Table 1: Potential Advantages of Using PPP
- Table 2: Differences between a Concession and Work Contract
- Table 3 Finance Pattern of NHDP in India
- Table 4: Summary of Private funded Projects in NHDP Project
- Table 5: Trade-offs in Vertical Decentralization
- Table 6: Trade-offs in Horizontal Decentralization
- Table 7: Comparison of Various PPP Procurement Methods
- Table 8: Indicative Timetable for Public Private Partnership Procurement
- Table 9: Commonly used Decision Statement, MUST & WANT Criteria
- Table 10: Number of Toll Road Operator’s in Various Countries
- Table 11: Tender Evaluation Criteria Packages for PPP Projects in General
- Table 12: Selection Criteria Weighting in Four European Countries (%)
- Table 13: Weightage used in NHAI to Equate Different Experiences of Bidders

List of Abbreviations used in the Report


- BOO Build Own Operate
- BOT Build Own Transfer
- CGM Chief General Manager
- DBFO Design Build Finance Operate
- DGM Deputy General Manager
- ENPC Ecole Nationale des Ponts et Chaussées, Paris
- GDP Gross Domestic Product
- GM General Manager
- GOI Government of India
- GOP Government of Punjab
- LPVR Least Present Value of Revenues
- NHAI National Highway Authority of India
- NHDP National Highways Development Project
- PIA Punjab Infrastructure (Development & Regulation) Act, 2002
- PIDB Punjab Infrastructure Development Board
- PRBDB Punjab Roads & Bridges Development Board
- PIRA Punjab Infrastructure Regulatory Authority
- PIU Project Implementation Unit
- PPP Public Private Partnership
- PSP Private Sector Participation
- PWD Public Works Department
- SNBATI Syndicat National du Béton armé, des Techniques industrialisées
- UNCITRAL United Nations Commission on International Trade Law
- UNIDO United Nations Industrial Development Organization

   


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