Arun Lakani on Developing a Robust Framework to Make PPP Work

Private Public Partnerships are a great way to boost the development of a nation. A partnership beneficial to all the parties involved including the public. A lot of things go into making a successful venture. One of these is policies associated with such partnerships.

Recently we spoke to Mr. Arun Lakhani, MD Vishwaraj Infrastructure Ltd. and noted PPP expert on his experience in setting up successful PPP ventures such as the Nagpur 24x7 water project.

Here are some of the insight we gleaned on setting up the right kind of policy framework, to govern projects of the scope and complexity that generally entails a Public-Private Partnership.

Build a framework to identify potential partnership areas
The most important thing even before considering PPP is to identify which are the areas that require such ventures. This is important because failing to do so means great loss of resources, manpower, time and money.

One of the ways to do so is to know analyse which areas are facing demand and supply issues. An in-depth study will give a clear idea where such partnerships can contribute positively.

Stand together & support each other
Any partnership is tricky at best, add to that politics, media, extremists and there is a storm brewing. In such a scenario it is important that both parties support each other and policies made are effective, accountable and fair to all the stakeholders involved.

Since the operational and execution risks are almost always undertaken by private player, government must ensure it offers its complete support to them. By taking care of approvals, licences and paper work, the government body can take the burden off the shoulder of its partner.

Project Ownership is a joint responsibility
PPP is a joint venture and hence there are bound to be issues related to management, responsibility and accountability and when working with the government, it seems to be the norm to have bureaucratic hold ups, red tapism and lackadaisical attitudes.

However, Mr. Arun Lakhani here chose to disagree. He talks about the classic example of Yeola town development as a part of the BOT road contract and how it helped in winning over the people of the town bringing down natural resistance to toll road projects, as a testament to what can be achieved when responsibility and accountability are jointly shared for the better of society.

Stakeholder Protection:
It is a fact that even though PPPs are a joint venture, there is no denying that private partners are the more vulnerable party. With such a cloud of uncertainty hanging over their head, there needs to be a provision to protect their interests. Government takes the least risk in PPP and hence has very little to lose. In such a scenario the rights of private partners must be protected as they are operating at maximum risk. For example an untimely termination of PPP can result in a serious loss as they invest huge amount of money and resources.

Here though Mr Lakhani warns that the contractual conditions must be very clearly spelled out and there should not be any scope for manoeuvring by private operators.

To conclude we would like to say PPPsare very rarely short term associations. They are like a double edged sword; especially for private partners. Hence it is important that both, the government and private sector, prove themselves to be an able partner for the other. And this can be done only when there is clarity and transparency between the two.