A public-private partnership involves an arrangement between a federal, state or local

government and private-sector entities, which can include for-profit and non-profit organizations.

Public Private Partnerships, better known as PPP are vital components for the rise and
growth of any country in general if implemented judiciously. Since, the government in
most of the cases either lacks the funds or the expertise to develop the big ticket project,
this model has been envisaged for fast track development. Since its inception as a viable
model of developing infra projects in early 1990s, it has been in the news for all the
wrong reasons. Barring a few successful case studies, it has mostly ended up in blame
game between the government agencies and the private parties.
For example in 2013 Reliance Infrastructure pulled out of Airport Express Line Project, a
project worth 58000 crores due to various reasons. Some of them were namely, inflated
traffic footfall projection which affected the profit forecasting of the project and did not
bring in the assumed return on investments that were earlier calculated due inflated
traffic assumptions. The other reasons for failure was excessive red tapeism, failed safety
cleareances, technical glitches, so on and so forth
GMR and GVK walked out of recently won mega highway projects. Adani Power and
Tata Power are struggling to transform their imported coal based projects into profit
making ventures due to the changes in the input costs.
Lots of super road projects were bid for large sums assuming that levying of toll for an
inflated traffic footfall will help recover the initial costs. This never happened. Also
adding to the problem was cost escalation in the project and no possibility for renegotiation of terms between the private and public players.
In electricity generation many firms wrongly assumed that they could get cheap coal
from state run coal monopoly which themselves are mired in controversies.
In most of the PPP projects delays occur due to red tapism & problems in acquiring land
which are endemic. Many of these private players take out loans from banks to finance
these projects. High debts means they lack the flexibility to cope when things veer off
plan.
Why do PPP projects fail?
"PPP in India is not about public and private partnership but an arrangement of client
and vendor where the term 'partnership' is missing. The reason why the PPP model has
not really taken off the way it has been envisaged is due to the fact that the private
players have been treated as the vendors who have to supply and the government
agencies are not willing to take the onus even where it is due, like in case of land
acquisition or any other hurdle where the government can facilitate the private partner.
Unless the government agencies are a willing partner with active participation to make
the project viable for the private players, it will never be an attractive proposition for the
developers," says Neeraj Bansal, partner, Real Estate and Construction with KPMG

India. On the private players part they should not turn projects meant for public good,
from profit making projects to profit maximisation projects.
To revive these stalled PPP projects, on a short term basis the government might tweak
the unfinished projects to benefit the private players but this will only encourage
cronyism which will affect how future projects are awarded.
The only solution to this problem is to reduce the risks the projects face from the delays
due to red tapes to delays in land acquisition.
Some experts are of the opinion that the way PPP projects are implemented in India
should change. They feel that the state should build things using private contractors. The
state should then sell the right to operate this completed and thus lower risk project to
private players. The money obtained from this sale should be used to finance other
projects.
Other elements which will help make PPP projects successful are

Clear understanding of proposed assets

Sharing of risks
Availability of quality technical data
Match objectives of the project to the resources available for the project
Harness all revenue sources
Ensure credibility of support from the public entities involved
Choose relevant and measurable outcomes for the project and link
payments to them judiciously
Build safeguards to mitigate the risk of failure
Allow operators to choose appropriate technology and design