Public Administration Mains 2017 : Model Question and Answer - 11
Public Administration Mains 2017 : Model Question and Answer
(Public Administration Paper I / Chapter: Organisations)
Question : What are the key issue areas in operationalising PPP ? (35 Marks/400 words)
Model Answer :
A Public Private Partnership has been increasingly adopted by the Government in the neo liberal era. PPP have emerged as popular development investment models particularly in public utility sectors such as energy and transport. It involves the implementation of a project by the Government/Statutory Authority with assistance from a Pvt. Sector Company by means of a Contract or a concession agreement and with compensation for the private concessionaire on a pre determined user fee or annuity basis.
Reason for adoption: PPP provide effective platform for leveraging private sentiments about PPP as capable of giving huge financial returns. In turn, government can tap on private financial strength ,technological capability and management techniques for quality delivery of public services.
Despite its several advantages like better value for money, quality services, efficiency of the private sector and risk transfer there are certain key challenges in operationalising such a model
1) Corporate Governance : A JV model where Government and a Pvt entity create a SPV to build an infrastructure requires strong corporate governance
2) Financial Burden : Annuity Model requires a large amount of funding from the government, for which it must institute payment guarantee mechanisms. The user fee charged can also be high which the government must pay if it has to make the service available for free
3) Performance based management has to be ensured for service delivery since else there no way to ensure accountability of the private concessionaire e.g Private companies collecting waste from households on behalf of MCD. They are paid according the quantity of waste instead of quality(segregated) which impacts the use of the waste in the Waste to Energy Plant in Okhla
4) Contract tenure : In the above cited example due to time bound contracts a review of terms is a not possible in the middle of the contract
5) Accountability : It would require the public authorities to maintain strict vigilance of the operations of the private concessionaires to ensure compliance with quality standards. This requires adequate knowledge among the Government agency along with the necessary reviews and co-ordination with the pvt. entity. Mechanisms like achievement based payment (achieving milestones) and short period maintenance responsibilities along with incentives for early completion.
At all times congruence of goals must be maintained by the Private entity- to provide quality services and not charge exorbitant costs either to the people or to the Government. (Total Words-394)
(Linkages : PPP and Government, PPP and Private Entity, PPP and Investment Model, PPP and Key Challenges)