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Renegotiation in public-private partnership (PPP) projects in its way

No Comments Sub Category:Realty News Posted On: Jun 23, 2014

The government is considering about some major moves to give an upward thrust to the infrastructure projects in the country. It is considering about allowing infrastructure players to renegotiate already bid public-private partnership (PPP) projects. Discussions have begun on creating a ‘resolution panel’ and this will include all the global best practices to provide a cushioning to our ailing infrastructure industry.

Most of the countries have a provision for renegotiation of contracts under the PPP mode as a number of issues crop up after a project kick starts. For example, South Africa’s PPP unit is empowered to approve changes in conditions. Similar models are followed in many other countries.

C Rangarajan, who was the chairman of the Prime Minister’s Economic Advisory Council until last month, was asked to look at resetting of conditions for road projects when a number of projects got stuck in the economic downturn.  Vinayak Chatterjee, chairman, Feedback Infra Pvt Ltd mentioned that it is humanly impossible to make accurate forecast for 30-40years and hence renegotiation is necessary in PPP.

Most of the private players bid aggressively for road projects to bag the deals and when there is any economic downturn, they request for a reset in premia. This is in a way fair as the prices can never remain the same in a growing economy vis-à-vis a sluggish economy. The issue has also been taken up by industry bodies including CII (Confederation of Indian Industry) with the government time and again and looks like time has come for some action to be taken on it.

Source- The Economic Times

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