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I have serious doubt...... Question of PPP. In gs 3 ...., was the unsustainability of projects mentioned in the question specific to financial difficulties faced or should it include issues of accountability too...... I interpreted as both....... I felt the wording implied more of financial issues....
I have serious doubt...... Question of PPP. In gs 3 ...., was the unsustainability of projects mentioned in the question specific to financial difficulties faced or should it include issues of accountability too...... I interpreted as both....... I felt the wording implied more of financial issues....
I feel both arguments are relevant here. I've mentioned both, and a few more also. Examiner bhi bolega, kuch jyada hi broad minded hai ladka. )
@vadacurry@ck10203 will this question include environmental and health liabilities too…like if a mega coal power project is there ..and it causes environmental losses then those are unsustainable as the economic cost could be too high…also the environmental and health impacts will be known later in long term..future generations will be taking the brunt…had the union carbide plant or fukushima plant be a ppp project...
@vadacurry@ck10203 will this question include environmental and health liabilities too…like if a mega coal power project is there ..and it causes environmental losses then those are unsustainable as the economic cost could be too high…also the environmental and health impacts will be known later in long term..future generations will be taking the brunt…had the union carbide plant or fukushima plant be a ppp project...
My take on the issue- mainly financial health envtal and health should also be mentioned
@vadacurry@ck10203 will this question include environmental and health liabilities too…like if a mega coal power project is there ..and it causes environmental losses then those are unsustainable as the economic cost could be too high…also the environmental and health impacts will be known later in long term..future generations will be taking the brunt…had the union carbide plant or fukushima plant be a ppp project...
Don't know whether it is correct or not, but I mentioned these factors. But my main focus was on financial implications. I further stretched it to feeding suggestions into answer: like adding "People" component so as to convert PPP into PPPP, a mechanism to choose between BOT and EPT as per the requirements, and the 3P India initiative etc.
@vadacurry@ck10203 will this question include environmental and health liabilities too…like if a mega coal power project is there ..and it causes environmental losses then those are unsustainable as the economic cost could be too high…also the environmental and health impacts will be known later in long term..future generations will be taking the brunt…had the union carbide plant or fukushima plant be a ppp project...
Don't know whether it is correct or not, but I mentioned these factors. But my main focus was on financial implications. I further stretched it to feeding suggestions into answer: like adding "People" component so as to convert PPP into PPPP, a mechanism to choose between BOT and EPT as per the requirements, and the 3P India initiative etc.
Question is on long gestation infrastructure projects ie projects having long construction time and how they pass unsustainable liabilities on future generation.I discussed following issues 1.Funding:Most of the funding is from private partne,and long gestation projects are highly capital intensive,so this may lead to lead to stalemate and difficulty in project completion.Conditions like inflation,currency depreciation may impose additional pressure 2.Risk Sharing:High gestation,more risk due to externalities.Again differences in risk sharing between partners may produce difficult situation 3.Fee negotiation:Because of high capital involvement from private partner during construction,private partner may want the public partner to reconsider agreement about fee structure during operation in any type of ppp:user fee BOT,annuity BOT etc.This may become bone of contention between them.It may invite court cases and suspension of project.In case of success of negotiation,user fees likely to be high,which may put burden on general public 4.Issues related to penalities and incentives during construction
Remedies: Funding:Greater involvement from public partner and better avenues for private partner to mobilize funds. VGF,IDF,IIFCL,ECB etc Openness for negotiation on terms of contract without compromising future generation
Regarding environmental and health liabilities,the question is specifically on long gestation project,which is not operational.Even during construction envt. damage can occur,but it is not unique for ppp project.It can happen in ppp,pure public or pure private projects.
@vadacurry@ck10203 will this question include environmental and health liabilities too…like if a mega coal power project is there ..and it causes environmental losses then those are unsustainable as the economic cost could be too high…also the environmental and health impacts will be known later in long term..future generations will be taking the brunt…had the union carbide plant or fukushima plant be a ppp project...
Don't know whether it is correct or not, but I mentioned these factors. But my main focus was on financial implications. I further stretched it to feeding suggestions into answer: like adding "People" component so as to convert PPP into PPPP, a mechanism to choose between BOT and EPT as per the requirements, and the 3P India initiative etc.
Question is on long gestation infrastructure projects ie projects having long construction time and how they pass unsustainable liabilities on future generation.I discussed following issues 1.Funding:Most of the funding is from private partne,and long gestation projects are highly capital intensive,so this may lead to lead to stalemate and difficulty in project completion.Conditions like inflation,currency depreciation may impose additional pressure 2.Risk Sharing:High gestation,more risk due to externalities.Again differences in risk sharing between partners may produce difficult situation 3.Fee negotiation:Because of high capital involvement from private partner during construction,private partner may want the public partner to reconsider agreement about fee structure during operation in any type of ppp:user fee BOT,annuity BOT etc.This may become bone of contention between them.It may invite court cases and suspension of project.In case of success of negotiation,user fees likely to be high,which may put burden on general public 4.Issues related to penalities and incentives during construction
Remedies: Funding:Greater involvement from public partner and better avenues for private partner to mobilize funds. VGF,IDF,IIFCL,ECB etc Openness for negotiation on terms of contract without compromising future generation
Regarding environmental and health liabilities,the question is specifically on long gestation project,which is not operational.Even during construction envt. damage can occur,but it is not unique for ppp project.It can happen in ppp,pure public or pure private projects.
Certainly. But as we move towards PPP, many essential functions of Government is being contracted out. A popularly elected government will be more cautious on environmental issues.
@vadacurry@ck10203 will this question include environmental and health liabilities too…like if a mega coal power project is there ..and it causes environmental losses then those are unsustainable as the economic cost could be too high…also the environmental and health impacts will be known later in long term..future generations will be taking the brunt…had the union carbide plant or fukushima plant be a ppp project...
Don't know whether it is correct or not, but I mentioned these factors. But my main focus was on financial implications. I further stretched it to feeding suggestions into answer: like adding "People" component so as to convert PPP into PPPP, a mechanism to choose between BOT and EPT as per the requirements, and the 3P India initiative etc.
Question is on long gestation infrastructure projects ie projects having long construction time and how they pass unsustainable liabilities on future generation.I discussed following issues 1.Funding:Most of the funding is from private partne,and long gestation projects are highly capital intensive,so this may lead to lead to stalemate and difficulty in project completion.Conditions like inflation,currency depreciation may impose additional pressure 2.Risk Sharing:High gestation,more risk due to externalities.Again differences in risk sharing between partners may produce difficult situation 3.Fee negotiation:Because of high capital involvement from private partner during construction,private partner may want the public partner to reconsider agreement about fee structure during operation in any type of ppp:user fee BOT,annuity BOT etc.This may become bone of contention between them.It may invite court cases and suspension of project.In case of success of negotiation,user fees likely to be high,which may put burden on general public 4.Issues related to penalities and incentives during construction
Remedies: Funding:Greater involvement from public partner and better avenues for private partner to mobilize funds. VGF,IDF,IIFCL,ECB etc Openness for negotiation on terms of contract without compromising future generation
Regarding environmental and health liabilities,the question is specifically on long gestation project,which is not operational.Even during construction envt. damage can occur,but it is not unique for ppp project.It can happen in ppp,pure public or pure private projects.
Certainly. But as we move towards PPP, many essential functions of Government is being contracted out. A popularly elected government will be more cautious on environmental issues.
By the way, a good comprehensive answer. All the best.
In this answer, which was the last answer I wrote in GS2, I wanted to mention take-out financing as a viable mode of financing such projects. But I couldn't remember this term. So in the last 1 minute, I explained whole of take-out financing, saying that this is required, but didn't write the term itself. As soon as I came out of the exam hall, I could recollect the term
In my opinion, unsustainable liabilties are referred to financial nature (long gestation is generally use for financial difficulties)......I argued two points:
a. difficulty in deciding the tariff through which project proponent will earn revenue......initially they make optimistic projections and later say that economy has changed.......later the government does not have any option but to raise the tariffs....
b. debt taken by them is huge and failure of execution will mean burden on exchequer (as banks will be recapitalized by the government)
solution is creating strong regulators who can manage the bidding process and look through projections clearly and second solution is better designing of model concession agreements..
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Comments
Examiner bhi bolega, kuch jyada hi broad minded hai ladka.
will this question include environmental and health liabilities too…like if a mega coal power project is there ..and it causes environmental losses then those are unsustainable as the economic cost could be too high…also the environmental and health impacts will be known later in long term..future generations will be taking the brunt…had the union carbide plant or fukushima plant be a ppp project...
1.Funding:Most of the funding is from private partne,and long gestation projects are highly capital intensive,so this may lead to lead to stalemate and difficulty in project completion.Conditions like inflation,currency depreciation may impose additional pressure
2.Risk Sharing:High gestation,more risk due to externalities.Again differences in risk sharing between partners may produce difficult situation
3.Fee negotiation:Because of high capital involvement from private partner during construction,private partner may want the public partner to reconsider agreement about fee structure during operation in any type of ppp:user fee BOT,annuity BOT etc.This may become bone of contention between them.It may invite court cases and suspension of project.In case of success of negotiation,user fees likely to be high,which may put burden on general public
4.Issues related to penalities and incentives during construction
Remedies:
Funding:Greater involvement from public partner and better avenues for private partner to mobilize funds.
VGF,IDF,IIFCL,ECB etc
Openness for negotiation on terms of contract without compromising future generation
Regarding environmental and health liabilities,the question is specifically on long gestation project,which is not operational.Even during construction envt. damage can occur,but it is not unique for ppp project.It can happen in ppp,pure public or pure private projects.
But as we move towards PPP, many essential functions of Government is being contracted out. A popularly elected government will be more cautious on environmental issues.
As soon as I came out of the exam hall, I could recollect the term
a. difficulty in deciding the tariff through which project proponent will earn revenue......initially they make optimistic projections and later say that economy has changed.......later the government does not have any option but to raise the tariffs....
b. debt taken by them is huge and failure of execution will mean burden on exchequer (as banks will be recapitalized by the government)
solution is creating strong regulators who can manage the bidding process and look through projections clearly and second solution is better designing of model concession agreements..
Only UPSC knows what is right......