How Will Coronavirus impacts Public Private Partnership?
With reduced economic activity, due to pandemic outbreak, PPP Projects (especially in transportation sector) will experience considerable revenue growth challenges. In most instances, the vulnerability scope and extent to this force majeure risk was not foreseen in PPPs that rely directly on revenues generated by user fees. The major impact shall be witnessed by toll roads (lack of users due to lockdown) and airports (loss of gate fees, refueling fees, airport commercial concessions). Even PPPs that receive revenue through availability of payments might suffer in long term, as government face shrinking economy that will result in declining tax revenues and reduced budgetary allocations to honor the existing commitments to the contracts.
As on March 2020, a total number of 1824 PPP projects worth USD 327 Billion are on different stages of implementation in India. Out of these approximately 57% of the projects fall under transportation sector, which in turn, is exposed to maximum risk due to coronavirus outbreak.
PPP Projects – The Need For Strategic Focus on Mitigation & Recovery
The current global health crisis doesn’t need any introduction and is one of the biggest ever witnessed by the mankind. Government need to proactively engage with the private sector partners to mitigate the impacts arising due to the pandemic as soon as they surface. Failure of PPP projects should not be an option. Also, it is imperative that the private sector should be assured that, as soon as problems arise, they can approach their public sector partners and share project impacts without fear of penal actions that could unilaterally blame them for impacts. Further, it is important that the recovery plans are harmonized with the strategic plans and national strategic priorities.
Recovery planning will only be effective if short term, medium term and long-term strategies are embraced that address necessary mitigation strategies for next few weeks and coming months. Having said so, the coronavirus will most certainly offer new resilience opportunities for the stakeholders as the PPP market recalibrates. In the meantime, truly sustainable and resilient PPPs should be promoted to help mitigate the coronavirus’ impacts to vulnerable communities and those that are already grappling with them.
By the medium of this report eninrac team attempts to assess the impact of global health crisis on Indian PPP projects across different sectors. The project monitor covers the list of all PPP projects under various stages of implementation and their exposure to risk post COVID – 19. Further, the project monitor shall also cover region wise investment scenario along with the details of all the related stakeholders.
KEY QUERIES ADDRESSED
- What is the opportunity size as per investments under different segments which are apt for PPP model in India?
- Why PPP model can be viable for future in India as per budgetary allocations in India?
- What shall be the opportunity under PPP model and tracking state wise projects for Water Sanitation Sector in India?
- What shall be the opportunity under PPP model and tracking state wise projects for Transport Sector in India?
- What shall be the opportunity under PPP model and tracking state wise projects for Social & Commercial Sector in India?
- What shall be the opportunity under PPP model and tracking state wise projects for Energy Sector in India?
- What shall be the opportunity under PPP model and tracking state wise projects for Telecommunication & Network Services in India?
BUSINESS CASE FOR PPP PROJECTS IN INDIA
- Govt's Infra push critically dependent on project preparation and private sector participation;
- Initiatives for building up components of the agri-logistics and national cold chain are on cards;
- Krishi UDAN to be launched by the Ministry of Civil Aviation for international and national routes to improve value realisation, and Kisan Rail to be set by Indian Railways through PPP for transporting perishable goods;
- INR 1.70 Trillion of investment for Infrastructure Projects is pegged by the Government under National Infrastructure Pipeline (NIP);
- Government is expected to spend USD 18 Billion to fight Coronavirus impact, in which the maximum share will go for developing Healthcare Infrastructure;