Page 83 - Enhancing innovation and participation in smart sustainable cities
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United for Smart Sustainable Cities
Enhancing Innovation and Participation
The service delivery at the airports improves since the private enterprises have service level agreements (SLAs)
with the government. It also helps to bring the airports to international standards, without the government having
to invest heavily.
Key features and design
PPP systems were strengthened through the following measures to ensure their success:
(i) Major policy and institutional initiatives taken:
setting up of PPP Appraisal Committee to streamline appraisal and approval of projects;
preparation of PPP Toolkit to improve PPP decision making process;
establishment of transparent and competitive bidding processes through model bidding documents;
extending financing support through development funds, viability gap funding (VGF), user charge
reforms, etc.
(ii) Management information system (MIS) for continuous monitoring of the performance of PPP projects
put in place.
development of a strong and well-defined institutional structure for a sustainable PPP programme;
creation of nodal agencies, such as PPP cells, at the state or sector level;
laying down of an appraisal mechanism for PPP projects by the PPP Appraisal Committee (PPPAC);
audit mechanisms for transparency and fairness in projects;
independent regulatory mechanism (wherever there is no sector-specific regulator) to ensure the
protection of interests.
(iii) Financial initiatives
Bank loans to earning-based PPP infrastructure projects under concession agreements are to be
treated as secured advances. This is expected to boost infrastructure financing, particularly for Build-
Operate-Transfer (BOT) roads projects and power sector projects.
External commercial borrowings (ECB) norms have been relaxed to help infrastructure companies
raise more funds from overseas markets.
Infrastructure companies are allowed to raise bridge finance from overseas markets under the
automatic route. Previously, the companies were required to seek permission from the RBI in order
to raise bridge finance.
Infrastructure companies are allowed to raise ECB for a maximum period of five years for importing
capital goods. Previously, the companies could raise ECBs for a period ranging from one year to three
years only.
The ECB limit has been increased for NBFC-IFCs (non-banking finance companies classified as
infrastructure finance companies) under the automatic route from 50% to 75% of their owned funds,
and the hedging requirement for currency risk has been reduced from 100% of their exposure to
75%.
It is interesting to note that the aforementioned measures are unique to the Indian Airport PPP system.
(iv) Role of ICT in enabling the project:
As this study is related to PPP funding of the aviation projects, the role of ICT is limited to the
processes like e-tendering, project monitoring, execution and implementation of the SLA.
2.2 Implementation
The projects have been implemented in the PPP mode.
U4SSC series 81
