When one starts talking about public private partnership (PPP) in city or urban development the immediate thing that comes to our mind is the toll collection booths. Over the years, common man’s perception about private sector participation in any public utilities or facilities is such that the cost of using those facilities would shoot up or the private parties are up to grab the public property.
However, the fact is that experiments elsewhere have shown that PPP is the best way to finance new investments and to outsource public functions. PPPs are mainly driven by limitations in public funds to cover investment needs and by efforts to increase the quality and efficiency of public services. Indeed, there are critics of PPP who point out that in PPP, the public sector usually ends up bearing larger financial risks and cost overruns than anticipated.
PPPs are not only commonly used by local governments across developed world for financing public infrastructure and services, but are also a widespread form of financing for large-scale urban projects. Although they are mainly used for regeneration purposes, they are also used for the development of new projects or for many other types of project.
In India, PPP is not a new thing and several local bodies and state governments have implemented and also are running those projects successfully. However, most of these projects are concentrated in water supply, solid waste management and urban transportation. Despite making the initial beginning, PPP has failed to evolve as source of funding and project implementation. Reasons are several and most of the blame for the slow pace of growth has to be taken by the government. Opaque rules and their enforcement, snail’s pace of decision making and absence of good dispute resolution mechanism are some of the reasons which are acting as hurdles for the growth of PPP in India.
However, PPP is the way forward for us if we are really serious about building 100 smart cities within the time limit specified. Apart from helping to augment funds, PPP will also result in better project delivery. Most of the projects can move beyond the foundation stones stage as in case of PPP, Financial closure, Project commencement and Project completion schedules are typically built into the agreements with penal clauses for non-adherence. Further, PPP also enhances efficiency and creates an overall competitive environment.
Time is moving too fast and the government has to think and create necessary framework to facilitate PPP in our urbanisation exercise. According to some reports, an estimated 3 million people move to cities every week. By 2050, city dwellers are expected to outnumber their rural counterparts by a ratio of 2:1. However, our existing urban infrastructure is pathetically insufficient to meet the growing needs of the population. Result is there for all to see – increased congestion, reduced quality of life, lost economic potential, and negative health outcomes.
While cities around the world are more and more looking to implement initiatives that respond to these challenges we are still directionless and often clueless as to what needs to be done.
Smart city mission or any other programs relating to urban development should not be just for the benefit of few contractors but should be aimed at improving the quality of life for the residents and as a means of refurbishing and modernizing aging infrastructure assets. It is high time we learn from others experience and use PPP to overcome traditional barriers to funding and financing smart city projects which can also help to employ new technologies potential to reduce costs, recycle existing and legacy infrastructure assets, unlock value, and bring a critical mass of players together to spur economic development.
We are already a victim of haphazard growth and unplanned development. However, we should not repeat the same mistake in future too. Future cities should be developed through technology, innovation and collaboration – of course, with a human face. This can happen only through active private sector participation.