Select articles from ET (2-4 June)

Why PPPs are Failing, and How to Revive Them

Reason for failure of PPP:

In a PPP contract government's obligations are to deliver land for the project and procure preliminary environmental clearances. 

Now private companies believed that these obligations will be met by the government so initially there was a great euphoria for these PPP projects.

But due to overambitious implementation timelines and lack of preparedness, these obligations could not be fulfilled, especially over the last five years.

What followed was a tendency to persuade the private partner to stay with the project and suffer these delays. Private partners generally chose to absorb higher input prices through the delay , than seek legal remedies because 

1. time taken to enforce contracts through the legal process is long
2. these delays can be used to renegotiate favorable terms with the government
Now this led to private companies bidding unreasonably for projects to just get the contracts as they knew that they can renegotiate the contract again later.

In the euphoric years of high economic growth, these problems were masked; but with the economic slowdown, lower-than-expected demand for services and sharp increase in input costs, these have snowballed into crises, notably in the highways sector.

A principal reason is this casual attitude of both parties towards contracts and disregard for their non-violable nature. Inability to take timely decisions under the contract is equally to blame -it may have been better for the government to terminate projects in case of delay by the private partner in raising debt from banks, given the lower financial viability of the projects due to aggressive bidding.

Sometimes, the reluctance to take a tough stand is the fear that bidding the project a second time could result in lower bids, which auditors and vigilance authorities could frown upon.

As solutions slowly emerge for such projects, what could be the lessons for the future rollout of PPPs? 

First, set realistic milestones for programmes rather than impose unattainable deadlines on underprepared organisations. It would be equally important to simultaneously build capacities of government agencies to administer complex contracts and deliver on critical obligations quickly .

When bids are unsustainable, it is important to terminate the contract early , before funds are disbursed and investments made. It is important to protect officials from the consequences of right decisions, irrespective of the outcome of subsequent rounds of bidding. This would instil the needed confidence in officials to take the best decisions in the interest of the project.

The role of banks and financial investors to rigorously appraise projects also needs to be emphasised, given their rather cavalier approach to financing in the past. Further, as recommended by various stakeholders, establishing independent regulatory and dispute settlement mechanisms for expeditious settlement of disputes or to deal with industry-wide concerns needs to be fully explored.

Rajan could Hold Rates if Price Pressures Ease

Namo Govt Drawing Up its 100 Day Agenda What Could Be On The Cards

10 Tax Issues the Budget Needs to Address

UNEARTHING BLACK MONEY Will New Govt Set Things Right..

Highways Min Keen to Clear Road-building Bottlenecks

The highways ministry plans to float Cabinet notes on three key issues that have blocked road building as it looks to get the moribund sector bustling again. These three action areas are 

• the liberty to choose the mode of project implementation, 
• the power to make changes in the model concession agreement (MCA) and 
• allowing concessionaires to exit fully after construction.

The highways ministry had been keen to push the three items under the previous government as well but there wasn't enough support for the plan. Officials had earlier said that increased power to choose between public private partnerships (PPPs) and cash contracts (engineering, procurement and construction, or EPC) when awarding projects would help at a time when private sector participation has gone down drastically and help projects get awarded faster.

The ministry currently follows the BK Chaturvedi committee recommended waterfall mechanism to determine how to execute a road project. Under this, depending on the traffic density, the tolled BOT (build, operate, transfer) method must be tried first, followed by the annuity BOT model and then EPC.

Govt Readies Plan Rs.25k-cr National for Waterway Grid

The Narendra Modi government has drawn up an ambitious Rs25,000-crore plan to create a national waterway grid linking Ganga, Brahmputra, Mahanadi and Godavari rivers.
“The plan is ready....We will soon move a formal proposal,“ a senior shipping ministry official said, adding that the underlying objective is to enable water from big perennial Himalayan rivers to flow into peninsular ones generally have strong seasonal flows.
The waterway grid will also help control floods. The proposed grid will have road linkages to ports to facilitate faster movement of cargo.
How Does 5G Work
WHAT IS 5G? 
5G is the short for fifth generation, a mobile broadband technology that is in the early stages of works and likely to be in place six to seven years from now. A 5G network will be able to handle 10,000 times more call and data traffic than the current 3G or 4G network.

Data download speeds on 5G networks are likely to be several hundred times more than 4G.

WHAT WOULD A TYPICAL 5G EXPERIENCE BE LIKE?

You could download a three-hour high-definition movie on a mobile device in one second. It takes several minutes on a 3G or 4G network and several hours on 2G.

Live gaming and real-time video streaming will be possible without any lags as data transmission happens literally in the blink of an eye. Those annoying video buffering during streaming sessions would disappear.

WILL 5G WORK ON THE SAME SPECTRUM BANDS THAT 3G AND 4G RUN ON?

Researchers have yet to finalise the spectrum band for 5G. But indications are that 5G networks will run on ultra-high spectrum bands like 15 GHz, 27 GHz or even 70 GHz.

These bands offer far broader bandwidth than the lower 700 MHz, 800 MHz or 1800 MHz frequencies used for 4G, and hence can carry a lot more data at super speeds.

Spectrum, in this case, may be likened to a highway of airwaves on while telecom signals travel. Broader the highway, higher the amount and speed of data that can travel on it. The result: a richer mobile Internet experience.

WHAT IS THE CURRENT STATUS OF 5G?

The European Telecommunications Standards Institute is formulating 5G global technology standards, which are likely to be formalised by 2019.

Telecom companies such as Nokia, Ericsson, Alcatel-Lucent , NTT DoCoMo, NEC, Samsung, Huawei and Fujitsu are driving bulk of the 5G-related innovations.

WHEN WILL PEOPLE BE ABLE TO EXPERIENCE 5G?

5G networks are likely to be rolled out commercially between 2020 and 2025. If the global standards are finalised by 2019, the earliest commercial deployments could happen by 2020.

Japan's NTT DoCoMo is targeting a 5G commercial launch by 2020 and will start indoor trials at its R&D centre in Yokosuka this year. French-American telecom equipment maker Alcatel-Lucent is looking at a commercial rollout by 2025.

WILL 3G AND 4G HANDSETS RUN ON 5G NETWORKS?

No. 5G will require new chipsets and devices capable of supporting speeds upwards of 10 gigabits per second. 4G and 3G run at a fraction of that speed.