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Half infra dvpt cost to come from private sector: Kumari Selja - 14 Sep 2012 - SME Times

Published On :2012-09-17 17:57:00

Union Minister for Housing and Urban Poverty Alleviation Kumari Selja Thursday said the share of the private sector in infrastructure development is expected to go up to 50 percent of the total outlay during the 12th Five Year Plan (FYP) period.

"The total outlay for infrastructure is pegged at 1,025 billion US dollars for the 12th FYP - an increase of 100% over the previous plan. Private participation, which was 30 per cent in the last plan period, will rise to 50 percent of the total outlay," the minister said, stressing that the public-private partnership mode was the only solution for the problems of infrastructure.


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This Swedish model is inspirational - 14 Sep 2012 - The Hindu

Published On :2012-09-17 17:56:00

GIREM recommends waste-to-energy plants in each Assembly segment

As urban India grapples with the challenge of handling municipal solid waste, GIREM (Global Initiative for Restructuring Environment and Management), an industry body, has come out with an exhaustive report which recommends setting up of waste-to-energy plants at the Assembly constituency level.

According to a press release from GIREM, the report ‘Managing Solid Waste at the Assembly Constituency Level’, underscores the benefits of WTE methods, particularly in minimising the use of landfills; generating energy from waste; cutting down on huge transportation bills; and involving the community at the Assembly level. The report has been submitted to various State Governments.

The Chairman of GIREM, Sankey Prasad, said, “The amount of solid waste generated in India is unimaginable and only technology can help resolve the problem as landfill as a solution has major limitations. GIREM recommends safe and green technologies, which are implementable across the country. Combined waste incineration methods are time-tested in developed countries and the report has cited successful models.”

The President of GIREM, Shyam Sundar S. Pani, says, “Public hygiene in India has been compromised. It is one of the most neglected areas of urban development and we are sitting on a garbage bomb which is ticking away. Considering the gravity of the situation, GIREM’s study points out how the problem can be resolved at the Assembly level and also make the legislator accountable for cleanliness and upkeep of his or her constituency. The waste-to-energy plants are safe and environment-friendly and above all have the potential to supply energy to the grid.”


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Reform power sector with public private partnership model - 13 Sep 2012 - Economic Times

Published On :2012-09-15 17:55:00

Pawan Singh

The government appointed the Shunglu Committee to study the finances of power distribution entities (discoms). While the committee analysed the failure of the first privatisation experiment in Orissa, it appreciated the benefits of privatisation in Delhi and the franchisee model in Bhiwandi and elsewhere. It errs in favouring the franchisee model over public private partnership (PPP).

The committee's first ground is that the competitive process in case of PPP is restrictive: it allows only power sector players to bid. However, completely open qualifying criteria might be inappropriate, leading to bids from incapable and non-serious contenders.

Another factor weighing with the Shunglu Committee is that the capex of franchisee is audited in the accounts of the company and approved by the regulator. But this applies to PPP as well. Moreover, the PPP model has government representatives as on the board of discoms who can pre-audit the capex of discoms, whereas post-audit is the only resort with franchisees.

The Committee considers the loan Rs 3,452 crore provided by the Delhi government to Transco as financial support and assumes that such financial support to be an integral part of a PPP model. Actually, this money was used to part-finance power purchase for the initial five years, after which the discom bore the full power purchase responsibility. In contrast, in the case of franchisee, the risk and responsibility of power purchase remains with the state. From a public policy angle, this puts huge drain on the state exchequer. Power purchase accounts for nearly 75 to 80% of distribution cost.

The Shunglu Committee observes that the franchisee would not frequently seek tariff revision whereas the PPP will, annually. This is correct but it happens because PPP has to do power purchase which the franchise does not do. The state power company will have to seek periodic hikes.

The franchisee business model is based only on loss reduction. It may do little to work on systems improvement or grid strengthening. This may impair the quality and delivery of power supplied to consumers.

The Shunglu Committee has said that it is difficult to put in place a valuation in a PPP model. The Delhi Vidyut Board (DVB) case would make a worthwhile study in this regard. In DVB, assets had depreciated and become obsolete, making it hard to find buyers. Book value method, asset valuation model, or equity valuation method would not have worked.

In Delhi, the revenue streams of the discoms were capitalised to arrive at their valuation. Each discom was valued by means of modelling based on certain assumptions about tariff increases and targeted efficiency improvements.
The Delhi reforms were the first to adopt the principle of AT&C loss (the difference between energy input and units of energy for which payment is actually realised) as the measure of commercial efficiency, displacing the conventional measure of T&D loss or unaccounted energy (the difference between energy input and energy billed). This led to greater investor confidence.

The uniqueness of Delhi's power sector reforms lies in the fact that disinvestment was done on efficiency promotion, rather than to generate money from the asset sale. In the PPP model, the bidders were to quote on loss reduction targets for electricity over a five-year period. The uniqueness of the scheme lay in the fact that for every 1% reduction in loss, the system generated Rs 100 crore of revenue, and consequent saving to the exchequer.


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Plan panel pitch for PPP in schools - 11 Sep 2012 - Hindustan Times

Published On :2012-09-12 17:54:00

In a last ditch effort to attract private sector investment in schools and skill development, the Planning Commission on Tuesday held a meeting with top industry leaders presenting them with its Public Private Partnership model for these sectors.

Even though the private sectorshowed interest in the government's new PPP mode, government officials said they did not make any assurance on investments.

Planning Commission deputy chairperson Montek Singh Ahluwalia told the private sector that the government will be launching two schemes shortly for seeking PPP in presence of HRD minister Kapil Sibal and labour minister Mallikarjuna Kharge.

One would be HRD ministry's scheme for setting up 2,500 model schools and the other would be labour ministry's proposal to set up 3,000 Industrial Training Institutes in backward regions of India.

"The initiative in the first phase would involve setting up of 2,500 model schools to create capacity for quality education to about 40 lakh children," the plan panel said, in a presentation to the industry leaders.


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We have to spend more on health: Ahluwalia - 11 Sep 2012 - Live Mint

Published On :2012-09-12 17:53:00

The deputy chairman of the Planning Commission, in an interview, spoke about the challenges of pushing public health reforms

New Delhi: India is likely to finalize a draft Plan document next week to introduce universal health coverage in India. Montek Singh Ahluwalia, deputy chairman of the Planning Commission, spoke in an interview about the challenges of pushing public health reforms with limited resources at hand. Edited excerpts:

Will the government be able to push through sweeping healthcare reforms?

I don’t think the short-term problems of the economy should have any effect on the forward movement of health reforms. Steps are being taken to revive the economy and I am sure we will succeed. Meanwhile, we should keep our eyes on the medium term objective of developing a viable strategy for health sector reforms. One thing is clear, we have to spend more money on public health facilities and we will.

But money is not the only issue. We also have to use it well, and that means restructuring and reform of the public health system and also better regulation of health in general. However, health is a state subject and reforms will only take place depending on what the state governments want. Our job is to sensitize them and also support them in the 12th plan (2012-17). We do plan to do that.

Will you be able to achieve the spending target of 2.5% of GDP on healthcare?

We had said in the approach to the 12th plan that we should aim at that figure by the end of the 12th plan. But remember, the figure refers to plan and non-plan expenditure of the Centre and the states. The Planning Commission only decides central plan expenditure.

We discuss state plan expenditure but it is the states that decide, and non-plan expenditure, which is much larger than plan expenditure, is entirely outside our ambit. However, as an aspirational target, this is what the Centre and the states together should aim at.

What concerns you the most about India’s health sector?

Unlike other sectors, this is not a sector which can be left to market forces, even for those who have money. This is because information asymmetry is very high and incentives are not aligned.

Commercial health service providers do not have an incentive to take preventive steps—they make money if a patient goes for high end treatment, not if he or she takes preventive steps to avoid it. Lack of regulation is a major problem and there is a great deal of evidence of irrational prescriptions, and also substandard facilities.

Second, we have a very large population which simply cannot afford private care, so there has to be a large expansion in public sector health. At least 80% of the population needs to have access to good healthcare funding by the public sector. This could be through direct provision of services by public facilities, as is inevitably needed in rural areas. It could involve some PPP (public-private partnership) as some state governments are doing. It could be through a health insurance system such as Rashtriya Swasthya Bima Yojana (a government-run national health insurance scheme for the poor), where the government pays the premium. I am sure states will make different choices and we should give them flexibility.

Third, trained personnel are as important as money and we have huge shortages of doctors as well as nurses. Unless we expand supply, not much can be done by simply building facilities.

The 12th five-year plan attempts to put together a strategy which should lead to large scale expansion of public health sector in rural and urban slum areas. But it will take time.


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