The toll-operate-transfer model for asset recycling

India has a gigantic capacity for public-private partnership (PPP) investments. While PPP project implementation grew aggressively from 2001 to 2010, project awards dropped sharply between 1 April 2014 and 31 March 2015. This can be attributed to a lack of optimal and equitable allocation of risks between the stakeholders, cumbersome process and legislative uncertainty in land acquisition, lack of regulatory certainty regarding environmental/industrial consents and clearances, absence of a PPP regulator, instances of long-drawn litigation and unstable revenue models.

In November 2015, a report by the Committee on Revisiting and Revitalizing Public Private Partnership Model of Infrastructure recommended monetizing operational projects with a formidable record of revenue generation, which can then be doled out to private parties for operation and maintenance (O&M).

Finance Minister Arun Jaitley, in his budget speech for 2016-17, stressed the need for asset recycling, describing it as a process whereby the government, without transferring its ownership in operational assets such as roads, ports and airports, will allow private parties to undertake long term O&M obligations on payment of a lump-sum concession fee.