India exports PPP model for road-building to Lanka

Having steadfastly pursued its privatisation programme in the road sector, India is now exporting the PPP model to its southern neighbour, Sri Lanka.

Having steadfastly pursued its privatisation programme in the road sector, India is now exporting the PPP model to its southern neighbour, Sri Lanka.

Over the past year, officials from Sri Lanka8217;s premier highway development and maintenance authority 8212; the Road Development Agency RDA 8212; have been in close collaboration with consultancy firm Feedback Ventures and agencies like the National Highways Authority of India NHAI. Their purpose: To understand the basic requirements that facilitate a successful PPP model, policies needed to regulate its implementation, financial modelling of privately undertaken road projects and technicalities like documentation and bid process management.

8220;India has been through the various stages of privatisation 8212; from Build-Operate-Transfer annuity to BOT toll and now to Design-Build-Finance-Operate DBFO. Given the geographical and cultural proximity of the two countries, an Indian PPP model suitably tweaked can be applied to Sri Lanka as well,8221; says Akhileshwar Sahay, president government and multilateral advisory services in the infrastructure advisory division of Feedback Ventures, which is acting as a consultant to the Asian Development Bank in Sri Lanka.

As part of the collaboration, a select group of RDA8217;s senior officials were imparted monthly instruction on the various facets of PPPs, apart from industry interaction to aid better understanding. A group of senior Lankan officials also visited India last year, with the intention of studying NHAI8217;s extensive National Highway Development Programme.

Speaking to The Indian Express from Sri Lanka, a senior RDA official said, 8220;We are encouraging the PPP route as there is a scarcity of local funding as well as donor funding from agencies like the ADB and World Bank. We are ready to offer schemes like Viability Gap Funding, which is currently being used by the Indian government to aid private infrastructure projects.8221;

A number of BOT road projects involving private participation are currently in the process of commencement or planning in Sri Lanka. The Colombo-Kandy highway, a 110-km project to be executed on a BOT toll basis, is about to be finalised and scheduled to be completed by 2010-11. Similarly, the 25-km expressway connecting Colombo to the Katunayake airport is also to be undertaken privately.

Other planned private road projects include the ambitious 270-km Colombo ring road and a 200-km highway connecting the Sri Lankan capital to Anuradhapura 8212; a popular tourist destination see box.

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Given its limited internal resources, the Lankan government8217;s preference for PPPs is implicit. While the government8217;s budgetary allocation for roads this year stands at 460 million a sum that includes current and capital expenditure, the cost of the Colombo-Kandy and Colombo 8211; Katunayake roads alone is pegged at 1.45 billion.

With the Lankan government willing to offer concessions like tax holidays, rebates, viability gap funding and commercial development rights to private infrastructure players, interest in the country8217;s road projects is fast heating up. Mutinationals from Malaysia and France are close to receiving the government nod for undertaking some of the PPP projects, and experts like Sahay say Indian firms are not far behind in the race to grab a piece of the Sri Lankan road pie.