Policy clarity a must for infrastructure

The policy of public-private partnerships ( PPP) for infrastructure calls for review and overhaul. Current norms simply jack up project uncertainty and lead to delays, fraying investor confidence.

Consider, for instance, PPP for highways. The policy stipulates that once a road project is awarded to a concessionaire, the private party has to complete land acquisition, get clearances from the ministry of environment and forests, tie up funds and meet other norms (not necessarily in that order).

The pre-investment clearances have meant huge delays and cost overruns, and the roads regulator, NHAI, has reportedly called for rescheduling almost Rs 1 lakh crore in premium payments in at least 23 road projects, and possibly for several others.

Note that premium is payable by the concessionaire to NHAI in build-operatetransfer projects, as the returns from tolls are supposed to be very attractive as per the initial traffic flow projections. But apart from the projections going haywire, the clearances themselves are not forthcoming in a time-bound manner.

Hence the pressing need for the government to do the initial spadework and secure all required project clearances before inviting bids for private participation.

Such a proactive policy would greatly reduce delays, remove implementation hurdles and cut down costs right across the board. There would still be calculated risks involved in project follow-through (such as traffic flows), but these would definitely be more manageable than the outright uncertainty involved with clearances and approvals.

The entire policy and regulatory framework needs to be streamlined, to produce shovel-ready infrastructure projects. It makes no sense to seek to leverage private sector efficiency in big-ticket investments with the policy in flux.