Meeting of Planning Commission and HRD on PPP in Schools

Source : Times of India

These are few excerpts from TOI report on this meeting.

While Haldea brought about some changes like putting the burden of land and infrastructure on the private entity, it was felt that the proposed schools cannot start from class I. HRD minister Kapil Sibal said in the meeting held on Wednesday that these schools have to be from class V. Haldea's proposal that these schools should also be in urban areas was also not approved, with the minister saying that they should be in backward areas.

Haldea's new proposal said land for schools will have to be acquired by the private entity and that the state government will only facilitate the process. It also said that the private entity will have to bear the capital expenditure as well as pay for uniforms, textbooks and annual health check-up of students.

The financing formula proposed by Haldea said that of the total capacity of 2,000 students, 50% should be supported by the government. And at least 50% of the students should be from SC/ST/OBC while the remaining may be children of non-income tax payers. Besides, 25% of the students should be girls.

The recurring support in respect of academic activities should be fixed at Rs 1,600 per month per student based on the average expenditure being incurred by the government on a student in Kendriya Vidyalayas in 2009. Government support should last for 10 years and should vary between locations. Graduated support should be provided for different locations: 75% in metropolitan towns exceeding 30 lakh population, 90% in cities exceeding 10 lakh, 100% in towns exceeding one lakh, 120% in rural areas and 140% in north-east, J&K and tribal areas.

Mr. Haldea's model appears to be a very rigid and fixed formula. Wonder what would be the bidding criteria  for these PPP schools?

Another issue is what to do with the non performing schools? There should be some thought as to how these can be transformed using PPP models.

Why cant HRD ministry appoint a few transaction advisors to propose a few models or even hold workshps with private sector to get right feedback?

PPP in Primary Education ??

Government had announced its plans to bring Public Private Partnership Model into primary education. This is one area where we see that private sector already has a lot of players. But problem with our primary education policy which doesnt allow profit taking from primary education and hence there is no legitimate business for primary education.

Currently all private schools are also being run as not-for-profit institutions. Question is as to why and how private sector players benefit from it. In that case one would have to look deeply into the fee structure of these schools and their way of procuring services for the school.

Given this scenario and motive of the government to woo private sector to partner in the PPP of schools one wonders as to if government would be able to make necessary adjustments in legal frameworks so as to allow private sector to make legitimate profits from the investment they are being asked to make.

Current sparring between planning commission and HRD ministry over the blueprint of PPP model in primary education does not seem to address this important issue at all

This news item in telegraph gives us the latest on current row :

Fissures on education partnership - Planning Commission stonewalls HRD ministry’s objections; meeting today

CHARU SUDAN KASTURI

as per this report:

The Planning Commission has stonewalled most objections raised by the human resource development ministry and experts to its blueprint for public-private partnership (PPP) in school education, setting the stage for a possible confrontation.

Ahead of a key meet with HRD minister Kapil Sibal and a panel of experts, the commission has circulated a blueprint that has not incorporated objections raised to an earlier draft, top officials told The Telegraph.

The meeting, scheduled for tomorrow, was initially planned to vet a “revised” Planning Commission blueprint that was to incorporate concerns raised by the experts and the HRD ministry.

But the talks could now witness panel members and the ministry questioning the commission on why it had only made “superficial” changes to the blueprint while ignoring substantive concerns, sources said.

One has to look at this model from Right to Education bill's perspective also. This bill would require government to foot a big fat bill of primary education and also redefine roll of private schools in it.

If one looks at the motive behind PPP option for primary schooling, ideally it should ensure :

• Increase Availability of service
• Improvement of quality of service
• Decrease cost of delivery of service

As one can see that private sector definitely can bring improvement of quality of service and that might add premium to the cost. Decrease of cost can be hoped if inefficiencies of government system are  done away with by replacing more accountable and efficient delivery of service. One needs to balance these 2 issues to see both qualitative and quantitative value for money from PPP options.

Last but not the least is increasing availability of service. This is crucial as critical business decision for private sector is at stake. Better business and lesser cost can be worked out if one chooses location where other physical infrastructure exists. Quandry is that in such places some sort of private and government school infrastructure exists and might be giving par or somewhat below par performance. The actual challenge for government would to work out a model which would attract private sector to provide better quality education at lesser cost and in far flung areas. This brings demand risk and also higher cost of service delivery into play for the private sector and government would have to find model to meet private sector half way on these issues.

One solution could be bundling of schools with a mix to provide cross subsidy. Other could be to allow local entrepreneurs to participate in the process with linkages to some common service provider to ensure better quality of service.
 

BIAL pulled up by House Committee - The Hindu

PPP is used to to get more efficient delivery systems from private sector. private sector is supposed to bring not only financial resources to the partnership but also technical and managerial expertise.

This news item in Hindu shows as to how BIAL has not lived upto expectations. Good to see that some monitoring is happening in these projects. More user feedback chanels should be opened by government to ensure that all PPP projects are forced to meet service level agreements stipulated in contracts.

Indian private sector needs to change its mentality of short changing government if they would like to participate in long term PPPs.
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Source : http://www.hindu.com/2009/12/22/stories/2009122257720100.htm

Bangalore: A joint House committee of the Karnataka State Legislature has recommended blacklisting L&T, Siemens and Unique Zurich Airport for a minimum period of five years citing “poor quality of workmanship” in the construction of Bengaluru International Airport (BIA), and “appropriate action” against those involved in important decisions on the project, including Infosys Chief Mentor N.R. Narayana Murthy and Rajeev Chandrashekar, MP.

 The committee found serious lapses in drafting the Concession Agreement to construct the greenfield airport on a public-private partnership (PPP) model, which was heavily loaded to benefit the private participants.

 BJP MLA D. Hemachandra Sagar, who headed the 21-member (15 MLAs and six MLCs) Joint Legislature Committee (JLC), tabled the report on “Examination of Construction of BIA” in the Legislative Assembly on Monday.

 The 124-page report said: “Considering the poor quality of workmanship executed, the trading of shares for profit without showing an iota of concern for the general public, the arrangement of entrustment of all airport works among the private players in BIAL and total apathy towards the needs of the users, the partners in the project, viz. L&T, Siemens and Zurich should not be considered for entrustment of any work by both the governments or their agencies for a minimum period of five years.”

 The panel said that in October this year, one of the promoters, Unique (Flughafen Zurich AG) Zurich Airport, Switzerland, made a profit by off-loading 12 per cent (Rs. 46.15 crore) of its 17 per cent (Rs. 65.38 crore) stake at whopping value of Rs. 484.60 crore. “The private promoter walked away with an over 1,050 per cent return in just four years. This indicates that the private players have set their eyes on huge multiplication of their investment and have cut many corners for the sake of short-term profit.”

 The panel gave a list of officers involved in important decisions for initiating “appropriate action” and it included Mr. Narayana Murthy, who was chairman of BIAL till 2005; Rajiv Chandrasekhar, Chairman and CEO, BPL Innovations Business Group; K. Siddappa, former Vice-Chancellor of Bangalore University; B.K. Das, former Chief Secretary; and K. Jairaj, who was MD, BIAL, and is now Principal Secretary, Energy Department. It said the Centre should withdraw the order permitting BIAL to impose a user development fee of Rs. 260 on passengers as BIAL had failed to provide adequate facilities of international standard to the users.

 The Union and State governments should not consider the release of any amount to BIAL, until the recommendations of the committee are met and the amount of Rs. 100.26 crore following reduction of project cost, is refunded by BIAL.

Power ministry, Planning panel spar over transmission bidding - Economic Times

Source : http://economictimes.indiatimes.com/news/news-by-industry/energy/power/Power-ministry-Planning-panel-spar-over-transmission-bidding/articleshow/5345847.cms

The power ministry has rejected the standard bidding procedure suggested by the Planning Commission for public-private partnership in transmission projects arguing the new procedure would create confusion among investors.

The commission has shot back saying the model transmission agreement (MTA) has been drafted after inter-ministerial discussions and stakeholder consultations, and is based on the model issued by the finance ministry for PPP projects.

The ministry has argued that the bidding process in the power sector is governed by procedures laid down in the Electricity Act and cannot be replaced by the procedure followed for other PPP projects in the infrastructure sector.

The ministry’s objection comes after the Planning Commission circulated a MTA for PPP in intra-state transmission projects where private investment is invited.  

Read More at Source  .....

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