MODES / Asset PPP Capital Private Private Features, relevance in India & examples

FEATURES ownership duratio investment partner partner

during n focus & revenue risk roles
contract responsibilit and
y compensatio
n terms
Management Contractual arrangement for the management of a part or whole of a public facility or service by the private sector.
Contracts Capital investment is typically not the primary focus in such arrangements.
Note: service contracts and management contracts of less than 3 years duration are not included in the definition of PPP in India.
Management Public Short – Not the focus Low Management This involves contracting to the private sector most or all
Contract medium Public (Pre-determined of all aspects of the operations and maintenance of a public facility or
(e.g. 3- fee, possibly of operation service. Although the ultimate obligation of service
5yrs) with and provision remains with the public authority, the day-to-day
performance maintenance. management control is vested with the private sector.
incentives) Usually the private sector is not required to make capital
investments.
These are prevalent in India across sectors. e.g.,
Karnataka Urban Water Supply and Improvement
Project, performance based maintenance contracts in
highways.
Management Public Medium Limited Focus Medium Minimum This is similar to management contracts but include
Contract (with – long Brownfield (Tariff / Capex, limited investments for rehabilitation or expansion of the
rehabilitation/ (Rehabilitation / Revenue share) Management facility.
expansion ) expansion) , This mode has been adopted in the power distribution
Private Maintenance and water supply sectors e.g. Bhiwandi Distribution
Franchise, Latur Water Supply Project.
Lease Asset is leased, either by the public entity to the private partner or vice-versa.
Contracts
Lease Public Medium Not the focus High Management e.g. Leasing of retail outlets at railway stations by Indian
(e.g., 10- Public Revenue from and Railways
15yrs) Operations maintenance
Build Lease Private Medium Greenfield Low-medium Capex Involves building a facility, leasing it to the Govt. and
Transfer (Leased to (e.g. 10- Private Pre-set lease transferring the facility after recovery of investment.
(BLT) or the 15yrs) from the Primarily taken up for railway projects such as gauge
Build-Own- government government. conversion in India in the past, with limited success.
Lease- )
Transfer
(BOLT)
Build- Public Medium Greenfield High Capex Involves building an asset, transferring it to the Govt, and
Transfer- (e.g., 10- Private Revenue from and Operatio leasing it back. Here the private sector delivers the
Lease (BTL) 15yrs) User Charges ns service and collects user charges.
Concessions Responsibility for construction (typically brownfield / expansions) and operations with the private partner while
ownership is retained by the public sector.
Area Public Long Brownfield/ High Design, Herein the private sector (concessionaire) is responsible
Concessions (e.g. 20- Expansions Tariff revenue finance, for the full delivery of services in a specified area,
30 yrs) Private construct, including operation, maintenance, collection,
manage, management, and construction and rehabilitation of the
maintain system.
Importantly, the operator is now responsible for all capital
investment while the assets are publicly owned even
during the concession period. The public sector’s role
shifts from being the service provider to regulating the
price and quality of service.
For example, water distribution concession for a city or
area within the city.
Build- Responsibility for construction (typically greenfield) and operations with the private partner while ownership is
Operate- retained by the public sector.
Transfer
Contracts
Design-build- Public Short- Greenfield Medium-High Design, Not very common in India. Typically financing obligation
operate medium Public Tariff revenue construct, is not retained by the public sector.
(DBO) (e.g. 3-5 manage,
yrs) maintain
Build- Public Long Greenfield High Design, Most common form of BOT concession in India.
operate- (e.g. 20- Private Tariff revenue finance, e.g. Nhava Sheva International Container Terminal,
transfer 30 yrs) construct, Amritsar Interstate Bus Terminal, Delhi Gurgaon
(BOT)/ manage, Expressway, Hyderabad Metro, Salt Lake Water Supply
Design-Build- maintain and Sewage Disposal System.
Finance-
Operate-
Transfer
(DBFOT)
Build- Public Long Greenfield Low Design, This has been adopted for NHAI highway projects in the
operate- (e.g. 20- Private Annuity revenue finance, past. More recently, it is the preferred approach for
transfer 30 yrs) / unitary charge construct, socially relevant projects where revenue potential is
(BOT) manage, limited.
Annuity maintain e.g. Tuni Anakapalli Project, Alandur Underground
Sewerage Project
Build-own- Private partner has the responsibility for construction and operations. Ownership is with the private partner for the
operate duration of the concession.
Transfer
(BOOT)
Contracts
Build-own- Private Long Greenfield High Design, Most common form of BOOT concession in India.
operate- (e.g. 20- Private Tariff revenue construct, For example, Greenfield minor port concessions in
transfer 30 yrs) own, Gujarat are on a BOOT basis.
(BOOT) or manage,
DBOOT maintain,
transfer
Build-own- Private Perpetua Greenfield High Design, Under this structure the asset ownership is with the
operate l Private Tariff revenue finance, private sector and the service / facility provision
(BOO) construct, responsibility is also with the private sector.
own, Not common in India.
manage,
maintain