Concerned over the increasing pressure on finances owing to uncertainty on economy and policy front, infrastructure majors as well as representatives from the banking sector have approached the Prime Minister's Office (PMO) and the planning Commission Deputy Chairman Montek Singh Ahluwalia to set up an independent regulatory body with the authority to alter existing contracts in projects under the Public Private Partnership (PPP) model.
They are of the opinion that in absence of such a mechanism, private sector are skeptical about how much they can contribute to the government's ambitious $1 trillion investment plan for infrastructure. The Chairman of the CII Core Group on Roads has said that the PPPs model lacks in risk allocation and private sector participation in infrastructure project is transferring a lot of risks like increase in capital cost, operating & maintenance cost and financing cost. Therefore, there is a need for regulatory authority for the proper risk allocation under PPP model and its decision should be full and final.
The investment in existing and new infrastructure projects involves high risks, low returns, huge capital, high incremental capital/ output ratio, long payback periods as well as superior technology. Hence, in order to bring in adequate resources for setting up of a sound and efficient infrastructural base, the government has entered into the 'Public Private Partnership (PPP)' programme.
