4.3 Results and Discussion
4.3.3 Failure to promote socio-ecological civility & democratic governance
In a PPP arrangement, the private sector and the public entity enter into a partnership with the main objective to build the projected facilities and deliver the infrastructure services in an effective manner. The decision-making practices for infrastructure development and implementation should focus on making the key decisions through more open and better informed deliberations, bringing transparency into the decision-making process and fostering awareness and collective responsibility. In order to promote such practices, the decision-making bodies should have the requisite capacity, motivation and inclination to incorporate sustainability principles in the decision-making process. PPP projects require multidisciplinary and highly specialized expertise on account of the complex nature of a business transaction. The PPP section in the Department of Economic Affairs provides technical support and expertise to government ministries and other authorities developing PPPs. It consists of specialists from different areas (finance, law, engineering, planning, etc.) with experience in both public and private sectors (DEA 2011). The typical actors/experts involved in PPP procurement include the project sponsors representing the equity investors, transaction advisors, financial institutions, legal experts, EIA consultants, technical consultants, and representatives of the public authority. Although the procurement process has been streamlined to a large extent, the key actor’s involved in PPP procurement lack the requisite skill and knowledge about sustainability concepts and green concepts as applied to infrastructure development (Hill and Collins 2004; Samuel and Oshani 2012). Mahalingam (2010) has highlighted that the public officials in India are not well trained in areas such as financial and legal structuring that are key to PPP transactions and are not used to new kinds of contractual arrangements such as PPPs where risk and responsibility are shared between the private and the public sector. In addition, the procurement and evaluation team do not normally have the inclination to encourage innovative solutions from the private sector that deliver sustainability (UNECE 2008).
Samuel and Oshani (2011) have suggested that the enhancing of the public sector capacity and education is a compulsory component of developing sustainable PPPs. Lack of understanding about sustainability and green concepts among the experts could lead to a situation where they fail to understand the importance of promoting socio-ecological civility and democratic governance in decision-making, thereby preventing promotion of innovative solutions for sustainable development.
Ensuring transparency in bidding processes is the topmost priority of the government;
transparency will retain the trust of the stakeholders. The government has consciously moved towards competitive bidding and maintenance of transparency in the award of infrastructure projects through PPP. Further, audit mechanisms have been put in place to maintain transparency, equity, and fairness in developing and implementing projects. To promote wider participation and transparency in the process, initiatives such as e-tendering and auction have been promoted (DEA 2011). But accountability and transparency of financing and the contractual arrangement are distorted, as private sector funding components fail to appear on public spending records (Cheung 2009; Samuel and Oshani 2012). The public disclosure of concession agreements has been made mandatory as per the model concession agreement, but the details relating to project financing are not publicly accessible since the private sector data on profits, costs, or lessons learnt are considered issues of commercial confidentiality by them (Samuel and Oshani 2011). In addition to the lack of transparency, the decision-making process lacks the involvement of nongovernment and non-market groups (Taseska 2008). Past PPP projects in India, such as the Dabhol Power Project and Pune Water Supply and Sewerage Project, were canceled due to the lack of transparency and competition in the bidding process (Tiwari and Ashish 2013). The lack of transparency and accountability in the public sector during bidding process could be leading to failure of socio-ecological civility and democratic governance principle of sustainability. PPPs also do not incentivize the private parties to structure the project such that it allows integration of informal sectors and institutions in the provision of services. However, the inclusion of such incentives will help in ensuring that even the informal sectors will have the opportunity to seek improvements and gain from the benefits of infrastructure development.
The success of PPP projects requires the active participation of the public in all the phases of the project starting with the planning and design phase through to the operation phase.
The public authority needs to put in place an appropriate stakeholder management system.
Such a system will allow active participation and act as a communication mechanism to send out clear and consistent information while developing PPP projects. A coherent and strategic approach to communication so as to inform and engage stakeholders is critical for mobilizing broad-based support for successful project development and implementation. The public would be engaged during the project development process and the implications of a project would be explained and opportunity given to all stakeholders
to raise their concerns. The regulatory and legal framework would also promote and protect the wider public interest, including users of public services. However, in the recent past, issues like land acquisition, heritage site protection, and environmental pollution have resulted in public opposition, overblown costs, and delays to most of the PPP projects (Chan et al. 2010; Cheung 2009; Cheung and Chan 2011). Opposition by the local population and contractual disputes between the public and private sectors make PPP unsustainable (Hamilton and Holcomb 2012). A few high-profile examples of public unrest leading to cancellation or delay of PPP projects in India include the Timarpur-Okhla Integrated SWM project (public opposition on environmental ground), the Latur Water Supply Project (public opposition on ‘right to water sentiment’), the Coimbatore Bypass Toll Road (local resident’s refusal to pay tolls), and the Delhi water privatization(public opposition on ‘right to water sentiment’) (Gupta 2011). The approach of stakeholder’s opposition on various issues could be failed to accomplish the socio-ecological civility and democratic governance goal of sustainability and faced the time and cost overrun in the development of PPP projects.
The development of PPP infrastructure projects normally depends on relationships between public and private sector. But, the goals of the private sector fundamentally oppose those of the public sector: the former focuses on economic gain while the latter strives to protect the public interest through regulation and minimization of risk (UN- HABITAT 2011; UNESCAP 2007). Conflict of goals between the private sector and government sector is an important issue, which should be taken care of by government to achieve the socio-ecological civility and democratic governance goal of sustainability.
There are instances of failure of PPP projects in India due to conflicting goals between public and private sector. For instance, Karur Bridge Project, which was developed through BOT route, had to be canceled when the newly elected municipal government (public sector) unilaterally canceled the concession agreement signed by the previous government on the pretext of a damaged approach road without compensating the concessionaire (Gupta 2011; Mahalingam 2010). Also, the ‘Kaman Paygon BOT’ project in Maharashtra has been terminated (pre-closed) and right of the company to collect toll was rescinded due to the conflict between IRB Pvt. Ltd. (private sector)and Government of Maharashtra, PWD on widening of the road (Tiwari and Ashish 2013). The issue of goal conflict between public and private sector due to social and environmental issues could be leading to failure of ‘socio-ecological system integrity’ principle of sustainability.
Samuel and Oshani (2012) have suggested that the PPPs should embed environmental and social safeguards in their goals, designs and specifications. One of the possible mechanisms to achieve this is through an incorporation of clauses promoting sustainability in the model concession agreement.