The govt will be a minority shareholder in the entity. The Cabinet will soon approve its final shape
The finance ministry is all set to invite bids from the private sector companies to infuse capital in 3P India. The entity is being set up to help resolve technical and legal issues faced in the public-private partnerships (PPPs).
Sources said the entity called 3P India announced by finance minister Arun Jaitley in July 2014 to aid “mainstreaming of PPPs” would be set up as a not-for-profit body and will have representation from the private sector and multilateral institutions.
The government will be a minority shareholder in the entity. The Cabinet will approve the final shape of the entity, which is expected to be led by a leading figure from the private sector.
While announcing the setting up of the agency, Jaitley had committed Rs 500 crore for it. This fund would go to a trust, from which the agency would draw for its expenses. It will have an initial equity base of about Rs 10 crore. 3P India’s main tasks includes redesigning the PPP model contracts. PPPs, which had initially took off well in the economic boom years, suffered later on account of the subsequent economic slowdown, its impact on profit forecasts and souring of relationship between states and private partners. In many cases, it led to litigation and withdrawal of the private partner from the project.
One of the issues affecting infra investments, which also has a bearing on PPPs, is the debt burden of large private players in the business. Scarcity of long-term funding is another. The country has over 900 PPPs now.
3P India, to be set up along the lines of Partnerships UK founded by Britain to facilitate PPPs, will help in framing of PPP policy and guide businesses through the project. Jaitley had said although PPPs have delivered some of India’s iconic infrastructure like airports, ports and highways, there has been a weaknesses in its framework due to rigidity in the contractual arrangements.
Jaitley wants more sophisticated model contracts and a quick dispute redressal mechanism.