Editorial: Jump-starting PPP

Sep 16 2013, 05:18 IST
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SummaryDMICDC’s ambitious Rs 3,25,000 cr project takes off

With the Delhi Mumbai Industrial Corridor Development Corporation’s (DMICDC) board finally clearing 9 projects with an envisaged investment of R1,20,000 crore, and the tough task of land acquisition done for all but two of the projects where it is in an advanced stage, the projects are pretty much ready for take off in a few months’ time. Unlike many other projects that get approved first, in the case of DMICDC, the detailed plans and the engineering maps are done before clearance. Since DMICDC has an asset-light model—the company tasked with building 24 cities by 2018 at a cost of R3,25,000 crore hardly has any staffers of its own—it has hired the world’s best consultants to detail the specifications for each contractor involved in any part of the city; programme managers who are to deliver the complete city to DMICDC include the likes of CH2M HILL which was in charge of the London Olympics. In addition, there are the likes of Cisco and IBM who are working with DMICDC to build an ICT layer to ensure the city is ‘smart’—thanks to sensors connected to an optic fibre network, all the city’s civic services can be monitored through a central control room in the city.

Like all PPP projects, DMICDC’s central premise is also to leverage public assets like land while other costs are taken care of by the private sector. There are some vital differences, however; a very important one being that DMICDC is funded by very low-cost Japanese government loans. The other is the quick turnaround envisaged and the nature of the partnerships developed. Each city is to be developed through an SPV which will have DMICDC as a partner with the state government—since the bulk of permissions for any city have to come from the state government, having a state government stake is critical. Indeed, the 7 DMICDC states are even signing state support agreements that detail the responsibilities of each government; the SPVs have even been given municipal powers to, for instance, approve building plans for the city; to set up, if need be, their own power transmission and distribution business. And in much the same way that private builders develop large projects, the DMICDC model is to get the states to buy their land as contribution to the SPV’s equity; spend around R4,000 crore per city to do the master planning and build the basic trunk infrastructure like

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