‘Old wine in new bottles’

Dear Editor,

The article on the public private partnership [PPP] model for developing infrastructure in India (“Redistributing risks”) in the April issue of India Business Law Journal gives the impression that all is well. I tend to think of the hybrid annuity model as old wine in new bottles, as despite the small changes (some of which are detailed in the article) it is essentially an annuity model with increased subsidies.

Your article fails to mention the biggest hope for risk mitigation in the ensuing legal framework, i.e. the possibility of renegotiation of concessions in certain defined cases. With ₹8 trillion [US$120 billion] of project/bank loans in trouble and waiting to take benefit of this renegotiation, the fate of the initial cases that are renegotiated would determine the future of BOT [build-operate-transfer] investors and investments.

Resolving this would require an understanding of commercial, technical and legal issues of the troubled projects from inception. As such, the stakeholders (the government or investors or lenders) would need a new breed of advisers who have an inter-disciplinary knowledge of techno, commercial and legal aspects of project development and financing. In short, dispute resolution will no longer require the involvement of just litigating lawyers, or accountants, or engineering consultancy firms.