PPP problems

Sumeet Kachwaha and Dharmendra Rautray analyse five key infrastructure construction issues in India

Given the infrastructure gap and resource crunch in India, the country has adopted the public private partnership (PPP) model and now has one of the world’s largest PPP markets. However, due to inefficient and inequitable allocation of risk among stakeholders, the PPP model has lost its lustre. The major problems plaguing construction projects following the PPP model are as follows.

Land acquisition. Land acquisition delays continue to be the single most important factor causing roadblocks for major projects in India. In its enthusiasm, the government has at times placed projects for bidding when less than 10% of the required land has been available. Even in cases where land acquisition had been completed and compensation paid to land owners, the actual handing over of possession to project owners would frequently get stuck due to political or allied reasons.

Environmental and forest clearance. The inability to secure mandatory environmental clearances has severely affected the financial model for most PPP projects in India, especially in the roads sector. The procedure to obtain approval under the forest protection statutes is cumbersome and time consuming. Permission to fell trees is for a stipulated time period and must be renewed upon expiry, resulting in additional delays.

The authors are partners at Kachwaha & Partners, a New Delhi-based firm with a special focus on infrastructure, projects and dispute resolution (www.kaplegal.com).