Page 103 - ITU-T Focus Group Digital Financial Services – Executive Summary

World class airports are fundamental to the development of a city, and its competiveness. Air traffic to a city
in modern times in fact is an indicator of its development. The economy of any city gets a boost with proper
air connectivity. This in turn would contribute to its competitiveness.

The concept of Airport City also has a job multiplier effect as a large number of jobs are generated within
this ecosystem.
The service delivery at the airports improves since the private enterprises have Service Level Agreement SLA
with the government. It also helps to bring the airports to international standards, without the government
having to invest in a heavily.

Key features and design

PPP systems were strengthened to ensure its success
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, VGF, user charge reforms, etc.
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 program;
• Creation of nodal agencies, such as PPP cells, at the state or sector level;
• Laying down of 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
protection of interests;

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 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 market under the
automatic route. Earlier, 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 5 years for importing
capital goods. Earlier, the companies could raise ECBs for a period ranging from one year to three
years only;
• 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 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.

Role of ICT in enabling the Project:
As this study is related to PPP funding of the aviation projects, role of ICT is limited to the processes like e-
tendering, project monitoring, execution and implementation of the Service Level Agreement.

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