DMPQ: What is PPP model? What are the advantages of PPP?(Economy)

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A public-private partnership (P3) is a contractual arrangement between a public agency and a private sector entity, typically of a long term nature. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility.

Advantages of PPP model

  1.   Better quality since the concessionaire (private sector) is to maintain the road for the period of concession.
  2.     Early completion of the project, since the concessionaire could save interest and earn early toll (in the case of BOT project) / additional annuity installments (in the case of Annuity project).
  3.     No costs overrun (price escalation).
  4.     The Client (Government/NHAI) does not have the burden of maintaining the highways.
  5.     Involving the private sector leads to greater efficiency.
  6.     The private sector has more flexible procurement and decision-making procedures and therefore, it can speed up implementation efforts.

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