Sinha, A K and Jha, K N (2021) Financing constraints of public-private partnership projects in India. Engineering, Construction and Architectural Management, 28(1), pp. 246-269. ISSN 0969-9988
Abstract
Purpose: The purpose of this paper is to identify the problems faced by banks, lenders, financial institutions, public authority, developers and concessionaires in course of financing of public–private partnership (PPP) road projects. Subsequently, the reasons that contribute to these problems were analyzed to come up with recommendations for mitigation of these problems. Design/methodology/approach: The methodology adopted is based on identification of financing problems and the reasons thereof, from a systematic and critical review of literature. Financing details including problems faced and reasons behind were extracted from details of one port, one airport and one road project. Data pertaining to financing of PPP road projects have been collected for completed (five projects) as well as projects under implementation (five projects) during a time interval of four months, starting from December 2018 to March 2019. The chosen three projects for case studies were executed in airport project at Kolkata in four years, offshore container terminal at Mumbai port in six years and Tuni Ankapali road project in three years. This period attains importance, as simultaneous progressive development and innovation in the PPP mode of project execution was taking place rapidly. Findings: The commercial banks in India dominate in providing debt to the PPP infrastructure projects, especially in the road sector. The non-banking financial companies and other intermediaries were still in their infancy then, and a corporate bond market was growing steadily, though slowly. Financing problems faced by the developers resulted in unwarranted time and cost overruns emanating from delay in land acquisition and grant of approvals, with these being the two major barriers to private sector participation. Even schedule overrun finally resulted in increased construction and financing cost. Originality/value: Demand for upgradation, building and expansion of transportation infrastructure (roads) exists to keep pace with economic development. Problems like lack of a developed market for financing, inadequate institutional capacity, lack of personnel having domain expertise and absence of exclusive legislation to govern the implementation of PPP road projects are encountered by the sponsors and developers. Delay in land acquisition and environment clearance inhibits any decisive action by the lenders and investors, as these two are integrally linked to the decisions to be taken with respect to the financing of projects. Investors and bankers are generally apprehensive of their investment getting locked in or ending up as non-performing assets. Identification and proposed mitigation of these problems may likely smoothen the rough edges for the financing of projects, resulting in smoother implementation.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | case study; construction; engineering; project management |
| Index terms: | infrastructure project, intermediary, transportation infrastructure, concessionaire, partnership, cost overrun, approval, personnel, container terminal, implementation, land acquisition, India, road project, project management, public authority, private sector participation, investor, methodology, financing, mitigation, banking, schedule overrun, economic development, case study, legislation, commercial bank |
| Subjects: | partnership management, contractual role, economic analysis, Geography, sociology, economic development, contract type, research methods, legal systems, administrative law, stakeholder participation, project controls, real estate economics, transport systems, financial risk, data collection methods, infrastructure and transport systems, project management theory and practice, management, contractual arrangements, infrastructure engineering, business, financial and cost management |
| Topics: | Engineering Principles, Procurement, Sustainability, Stakeholder Management, Urban Studies, Research Practice, Legal Issues, Supply Chain Management, Project Management, Contract Administration, Human Resources, Business Strategy, Geographical Context, Time Control, Cost Management |
| Descriptive scope: | 4 PCTE |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here