Tamil Nadu is planning to come out with Public Private Partnership policy to woo private investments in 100 iconic projects worth Rs one lakh crore. The policy is being framed by Tamil Nadu Infrastructure Development Board (TNIDB). Currently, projects worth more than Rs 1.5 lakh crore are at various stages of implementation.
It is learnt that the state is identifying a list of seven priority sectors for taking up the projects under the policy in the initial phase. These could be agriculture, transport, social, Industrial , energy, urban amenities and recreation sectors. Some of these could be in urban transportation systems, power generation, transmission, drinking water supply, health infrastructure, solid waste management and development of satellite towns.
Vying to reach the target of a $1 trillion economy by 2030, the state has taken efforts to reduce revenue deficit and create space for more capital expenditure. It is learnt that the government is investing more than Rs 50,000 crore annually for capital asset creation in the state. The investments need to be much more to reach the goal of $1 trillion by 2030. According to a Deloitte report, the Tamil Nadu government to achieve the milestone of a $1 trillion economy will have to grow at an average of 16.5 per cent, which is way above the current rate of growth of 10%.
As a result the state, while creating more fiscal space for investment from its own budget, is keen on inviting private investments to infrastructure development, according to official sources. During the last decade, private investment has been meagre and the state plans to create a robust investor friendly framework which will encourage private sector players to partner with the government. Sources said that the focus of the policy will be to share risks fairly, accommodate concerns of private investors and enhance capacities of government agencies in a planned planner.
Sources said that various models are being studied starting from Build Operate and Transfer, Gross cost contract (GCC), Built Lease and Transfer, Hybrid annuity among others. This also comes as Tamil Nadu government was mulling at innovative methods to operate Tamil Nadu State Transport undertakings (STUs) bus services by allowing private entities under public private partnership model. Under the GCC model, the responsibility of managing the transport network, revenue collection is undertaken by the STU whereas the responsibility of procuring, operating and maintaining the buses is by the operator.
Sources also said that the ownership of government land will not be transferred to private partners. However, the land will be given for the projectgon lease or fee to be collected upfront or periodically. The projects would have nearly around 20% internal rate of return depending on the risk reward allocation. The project is also likely to have a concession period between 10 to 30 years.
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