Public Private Partnership in

Infrastructure

PPP Project Lifecycle

Bottlenecks to PPPs

Lessons from leveraging land: a case of

Bangalore Mysore infrastructure corridor

What does this project is all about?

What does this project is all about?

Bangalore Mysore Infrastructure Corridor

Twin objectives

Connecting Bangalore and Mysore with an expressway

Developing the infrastructure around the periphery of Bangalore city
and around the expressway

Location

Why it so special to study this project?

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Pioneered the idea of leveraging land for achieving

financial viability
Land has been at the core of all the controversies over the
last two decades
Examples; Singur, Yamuna Expressway, Navi Mumbai
Special Economic Zone (Although there may be different
facets to these controversies, the "land" is at the core of it)
Project structuring

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Summary of events

Tender was invited by the state government of Karnataka on

September 28, 1988
Only one party submitted the bid

Pune based Kalyani Group, Pennsylvania (USA) based SAB

Engineering, and Boston (USA) based Vanasse Hangen Brustlin (VHB)
submitted the bid
It was a conditional bid
Conditions
government should (i) take the land acquisition responsibility and (ii)
share land acquisition and construction costs

The government did not accept the conditions

Project to be developed under the Build - Own - Operate Transfer (BOOT) mode

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Governments search other avenues

Government approached the Asian Development Bank

(ADB) for funds

ADB concluded that the project was financially unviable

ADB asked the government to share 20% of the construction cost
along with the land acquisition cost and take the responsibility of
acquiring land
ADB's proposal not accepted by the government

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Government went to drawing board again

Two strategies for development

Widen existing state highway (SH) 17 between Bangalore and

Mysore and convert it to a expressway
Develop SH 86, a slightly longer but parallel route to SH 17

ADB again rejected these proposals citing large scale

resettlement and rehabilitation (R & R) due to ribbon
development along the road
Towards the objectivity of connectivity between Bangalore
and Mysore, ADB suggested

A plan of doubling the existing railway line since land acquisition

would not be an issue here

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Some developments

L & T came forward in 1994 for executing the project on

BOT basis
- Deadlock

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Formal launch of Bangalore Mysore

Infrastructure Corridor (BMIC)

A memorandum of understanding (MOU) was signed on

February 20, 1995 in the presence of Chief Minister of
Karnataka, Mr. H. D. Deve Gowda and the Government of
Massachusetts
MoU was between the consortium led by Kalyani Group
and the government
Conduct preliminary investigations and surveys for the
expressway project and submit a project report
High level committee (HLC) was constituted to review the
progress

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Findings of the report

Report recommended the township development concept

to make project viable
Recommended the themes, locations, and size of the
seven townships
Townships were expected to house over 500000 people
and support a variety of activities
- Number of townships was reduced to five (and acreage to
4,285)
Government administratively cleared the project on
November 6, 1995

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Cost of the project

Expected project cost, including construction and land

acquisition, was over INR. 20 billion

Borne by the consortium

Government would use its powers to notify the land, the

operational aspects of land acquisition and settlements
were the responsibility of the consortium

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Steps towards land acquisition

Government order was passed on November 20, 1995

Authorizing acquisition of 18,313 acres of land

Development of a four land (convertible to six lanes)

expressway (including peripheral road, link road and
attendant facilities in and around Bangalore)
Five townships between Bangalore and Mysore
Project lease period as 30 years from the date of
completion

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Outcry from NGOs and Project Affected

People

Large scale dislocation of people

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Creation of special purpose vehicle

Special purpose vehicle (SPV) called Nandi Infrastructure

Corridor Enterprises Ltd. (NICE) on January 16, 1996
Consent and Acknowledgement agreement

Consortium assigned their rights obtained through GO and the

MoU in favor of NICE

Notified land for acquisition under the Framework

Agreement
Formally awarded the project to NICE on BOOT basis on
October 14, 1998

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Looking back

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How was the progress of the project?

On May 1996, Mr. J. H. Patel became the Chief Minister

On October 1999, the Janta Dal government under Mr. J
H Patel lost the elections to the Congress
Mr. S M Krishna New Chief Minister

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PILs, Politics and BMIC

Lack of information about the project among the public

PILs and representation by ESG

Clearance by MoEF
Land acquisition

Alleged violations of laws by various politicians and

beaucrats towards personal gains

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Friend turned into Foe

On February 12, 2004, the former Prime Minister and

former Chief Minister of Karnataka, Mr H D Deve Gowda
submitted a memorandum to the Governor Mr T N
Chaturvedi regarding BMIC

Illegal and corrupt practices, and that the project execution should
be stopped pending investigations and court cases

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Friend asked to become a Foe

In May 2004, the Congress and the JD (S) formed a

coalition government
New government decided to review the project
Committee formed under the Chairmanship of Mr. K. C.
Reddy

Excess land was allocated

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Judiciary the savior

Reddy

KHC dismissed PILs

KHC order was challenged in the Supreme Court
SC ruled in favor of the project

Bid by Swiss Challenge Method

Fresh bidding by the project

Supreme Court stayed the government notification

Directed BWSSB to coordinate for the timely completion of
peripheral road

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Discussions

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PPP Capacity Framework

PPP Competencies

Competencies
Category
Competencies

Project Appraisal

Procurement

Service Management

Project Lifecycle

Project
Identification

Transaction
Design

Contract
Management

Stakeholder
Management

Project
Conceptualization

Evaluation

Relationship
Management

PPP Process
Management

Project
Development
Process
Management

Project
Marketing

Service
Handover
Management

Project
Governance

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Identification of needs

Was the BMIC clearly defined the need for the project?

Improvement of connectivity between two places

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Project conceptualization and development

Lack of capacity in the government to conceptualize and

develop the project
Did Karnataka government made some mistakes here?

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Technical issues

Legal, regulatory, and policy issues

Land acquisition under the KIADB Act for industrial use

Absence of strong oversight mechanism

Institutional capacity

Quantum of land acquisition

Discrepancy in the land requirement created both political and
legal obstructions for the project

Weak
Lack of third party advice on the reports submitted by the
consortium

Deciding on PPP options

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Governance

Transparency in selection of private partner

Selected private partner on negotiation basis
Absence of any detailed project report
Collusion of vested interests

Lack of stakeholder consultation

Farmers
Environmentalist
NGOs
Political class

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Prerequisites of PPP options

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Basic Structures of PPP

Horizontal Partnership

Vertical Partnership
Public
Partner

Selling of shares
to private Partner

Public
Domaine

Concession Agreement/
PPP-Contract

share holders
agreement
Joint
Project
Company

private
share

private
Partner

public
share

purchase of services

Development

Design

Financing

Pure private
Project
Company

purchase of services

Construction Facility Management

Value Chaine

What are the take a way for me as a

Infrastructure Manager?

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