Clearing roadblocks

The Gujarat government has notched up another first with the infrastructure ordinance. Clearly laying down rules for private sector participation, Gujarat has eliminated much uncertainty associated with investment in the sector. The private sector8217;s experience in setting up infrastructure projects in India has been bitter. Concession agreements take anywhere between two to four years to thrash out. Once signed and sealed, public interest litigation has the project in courts for a few years and then construction can begin. By then time has taken its toll. Outdated projections and cost overruns invariably mean the company has to start from scratch. Most often, it has been the process involved and not lack of business prospects that has deterred investment in the sector. The Gujarat government has been the first to realise this. The infrastructure ordinance will now ensure that concession agreements are drafted quickly and will no longer involve drawn out negotiations. What will be conceded by the government isdown on paper. The private sector player only has to decide whether this is acceptable to him. In laying down procedures for competitive bidding and guidelines on how winners should be chosen, elements of subjectivity in the process have been cut 8211; as well as chances of corruption. What is also heartening are the provisions. By granting subsidy only in competitively bid projects state has ensured that most projects are tendered, reducing the possibility of public interest litigation alleging a nexus between the promoter and government. The ordinance8217;s provision, restricting the government stake in infrastructure projects to 49 per cent has ensured that control is in private hands, enforcing a more accountable culture in the new infrastructure companies.