Thursday, June 20, 2013

Structuring PPPs in Infrastructure

I have a column in today's Indian Express, co-authored with Dr TV Somanathan, on structuring Public Private Partnerships after off-loading construction risks.

Update 1 (6/10/2014)

Subir Gokarn feels exactly the same,
In the early stages of the process, PPP needs to be a combination of public funding and private execution. It is only at a later stage - the last two steps on the capital ladder - that private funding becomes viable. Proximity to the beginning of the revenue stream for the project - the predictability and stability that I alluded to earlier - is the determinant for effective entry of private financing into the process. Just as the entities associated with the each successive step of a capital ladder make their money by selling their stakes to the entities specialising in the next step, public funding of infrastructure can, at an appropriate time, sell stakes in projects to private entities, using the money thus made to finance new infrastructure projects. And so on. To give the concept clarity, PPP should perhaps be re-labelled FPTP - First Public, Then Private.

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