Quick Fix?

01 Oct 2013 CW Staff

On the early August, oomph-gone-missing day, thanks to the continuously sliding rupee, an economic crisis staring India in the face, and private-sector players in withdrawal mode from key road and urban development projects citing delays in environmental clearances, non-availability of fuel or finance, the topic of discussion may have been sombre. But the participants were anything but, as they sat down to offer speedy remedies on how to improve India's infrastructure sector. Among those who deliberated on the way forward were Pratap Padode, Managing Director, ASAPP Media; Ajay Thomas, Registrar, London Court of International Arbitration (India); Avadesh Singh, Deputy CEO, Egis India; Harish Mathur, Chief Executive, IL&FS Transportation Networks; Harsh Shrivastava, CEO, World Development Forum; Jyotinder Kaur, Economist, HDFC Bank; Kamal Verma, CEO, Srei Infrastructure Finance; Col SN Kuda, Executive Director, Ashoka Buildcon; SL Verma, Senior Vice President, Lanco Infratech; TK Amla, Head, Information, Liaison and Training & Asst Public Information Officer, CSIR; KV Pratap, Director, Infrastructure division, Planning Commission; Ashish Wig, Chairman, Indo-American Chamber of Commerce, Infrastructure committee; JL Khushu, Managing Director, Era Infrastructure; Rakesh Ranjan, Adviser (PCMD/HUA), Planning Commission; Palash Srivastava, Director PPPI & Programmes, IDFC; and BI Singal, Director General, Institute of Urban Transport (India).

By the end of the three-hour discussion that touched upon the lack of progress in areas such as roads, power, urban infrastructure, finance and transport, one thing on which everyone agreed never mind the surfeit of irony was the need for more political iron and public involvement to drive development in the country.

The key points discussed:

Is there building of capacities in the various sectors or are we witness to mere planning talk?
Raison D'ÐTRE for disputes leading to the holding up of infrastructure projects.
Effectiveness of arbitration as a tool to speed up already delayed projects.
Identification of areas of deficit and dismantling of current blocks. -òThe infrastructure investment gap.
The human capital challenge and ways to overcome it.
Technology solutions to fast forward road projects.
Renegotiation of contracts.

Ashish Wig, Chairman, Indo-American Chamber of Commerce:
In the roads sector there is a need for correct data and in the case of toll collection the concessionaire needs the support of the police and the government machinery. PPP is the way forward - we have some of the finest minds in the world and we just need to put our heads together.

Harsh Shrivastava, CEO, World Development Forum: The real challenge is to build pressure on elected representatives to ensure that there is faster implementation and completion of projects. Local aspirations must be taken into account right at the planning stage. There is a need to provide skill upgrade facilities for locals in the area where the project is happening. Information must be available on the economic costs of lost opportunity that, in turn, must be used to drive home the urgency of quick completion both to the locals and government. Also, citizens' groups should engage actively with government right from the project planning stage. Agencies should engage with locals during the project execution phase as was done by the Delhi Metro Rail Corporation (DMRC). That will build a groundswell of popular support for the project.

Col SN Kuda, Executive Director, Ashoka Buildcon:
There is a huge need for accumulation of accurate field data this must be owned by the client not consultant. We need to create an environment where engineers feel wanted. Unless you give time for planning, no projects can be done. We need to plan projects for the next 20 years. There is a need for 80 per cent of land being made available, and for all parties to ensure that there is forward movement.

Jyotinder Kaur, Economist, HDFC Bank:
We need credibility and accountability at every level. There should be stringent penalties for missed deadlines or violation of terms of contract. Our objective should be to ensure viable infrastructure investment. China's growth model is premised on infrastructure investment. Let us not run after targets. It is okay to fall short of targets so long as you do it with due diligence and create viable projects.

TK Amla, Chief Scientist, CSIR
We need to introduce another P to PPP to include People who live around the road while making an agreement. Taking people in confidence will help sort out land acquisition-related issues. We recommend employment of new materials and technologies by the contractors and the NHAI to make roads more durable. SL Verma, Senior Vice President, Lanco Infratech:
To avoid arbitration and claims, there should be standardisation. We should look at all constructions from a future perspective. Manpower issue in the highways sector needs to be addressed, both in terms of quality and size.

JL Khushu, Managing Director, Era Infrastructure:
If we do not encourage the PPP model, we will never be able to do it in future years. We need a coordinated approach and a faster rate of disposal of disputes and more clarity in the matter of shifting of utilities; specifics of such plans must be attached to the schedule. We need to increase the number of skilled people working on projects.

Rakesh Ranjan, Adviser (PCMD/HUA), Planning Commission:
There is a concept of pre-bid discussion where all issues are discussed. Bidding is about risk. If you take a risk, you have to bear it. In the matter of capacity building as far as urban development is concerned, we need reform at the city level. The problem from the Government of India perspective is of governance and reforms. Year after year, the Ministry has not been able to spend the amount allocated to it. I would say, historically, India has never been able to make a plan at a city level. Planning should be at the centre of urban strategy. We need to create conditions for reform at the level of the city.

In the roads sector, the issue is not about capacity building but the ability of the players to take up projects. The old NHDP road projects were easier to handle because of higher traffic density; there is not much enthusiasm now. There is definitely a decline in the investment climate of the country.

Harish Mathur, Chief Executive, IL&FS Transportation Networks:
We need allocation of risk among all stakeholders equally to ensure clarity and correctness in DPR, pre-bid negotiations, ensuring environment and forest clearances, and review of risks such as cost escalation at all stages.

Palash Srivastava, Director PPPI & Programmes, IDFC:
There is a need for a programmatic approach as opposed to a project approach. We need a system that will hold all stakeholders including the government accountable. While a sector regulator is fine, we should also have an ombudsman approach. Public information and consultation are also very important. Finance will follow opportunities.

Kamal Verma, CEO, Srei Infrastructure Finance:
Accuracy and accountability in providing road sector data and resistance to paying toll are major hurdles that need to be addressed. The government must use NGOs and the media effectively in spreading the message of the benefits of projects. There should be a regulator in the highways sector whose job would be to ensure how work can be made speedier.

BI Singal, Director General, Institute of Urban Transport:
I believe the concession agreement needs a relook. Dispute resolution should be sorted out across the table through internal discussions.

Avadesh Singh, Deputy CEO, Egis India:
There is need for human resource capacity building both in terms of quantity and quality. We need to churn out more engineers and increase campus recruitments. Suggestions must be invited for modification in the Model Concession Agreement.

KV Pratap, Director, Infrastructure Division, Planning Commission:
The private sector wants renegotiation of contracts citing unforeseen circumstances. We strongly feel that renegotiation is not the way to go. By doing so, you create problems related to the sanctity of contracts. Once you start renegotiation, all the gains of competition are lost. We need to write better contracts and enforce them with higher performance security. The whole idea of inducting private-sector investment into infrastructure projects was to allow them freedom to fail. We have to allow some projects to fail. On the must-do steps I would say: prepare the projects well; do not rush projects because that would lead to delays and disputes; have clear allocations do not renegotiate contracts just to reduce commercial losses of the private sector on account of opportunistic bidding. Our principle is to discourage renegotiations.

Ajay Thomas, Registrar, London Court of International Arbitration:
We need to look at institutional mechanisms to resolve issues, select the right kind of arbitrators, those with an understanding of infrastructure. In my view, a dream team would consist of a legally qualified person with an understanding of the infrastructure sector and contracts, a chartered accountant with number crunching abilities, and a good civil engineer. That would ensure a balanced tribunal. You need to have a two-tier dispute resolution clause where mediation can be the first option followed by arbitration or legal recourse. You also need to explore the concept of a dispute resolution board in the case of large infrastructure contracts where a panel of three experts is constituted at the start of the project. Their role is to oversee the project and nip any potential dispute in the bud.

Ironies have a way of getting lost in the rodomontade that is economic development rhetoric. On August 9, 2013, 68 years after the world's first atomic bomb was dropped on Nagasaki and paved the way for the Japanese city and nation to rise from the ashes in an exemplary case of reconstruction, the closed-group round table discussion dubbed 'Quick Solutions to Bridge Project Execution Gap' was held in New Delhi, the capital of India Inc's yet-to-develop $1 trillion infrastructure universe. And the gulf in the progress made on the ground development-wise vis-à-vis the Japanese could not have been more dramatic. On the early August, oomph-gone-missing day, thanks to the continuously sliding rupee, an economic crisis staring India in the face, and private-sector players in withdrawal mode from key road and urban development projects citing delays in environmental clearances, non-availability of fuel or finance, the topic of discussion may have been sombre. But the participants were anything but, as they sat down to offer speedy remedies on how to improve India's infrastructure sector. Among those who deliberated on the way forward were Pratap Padode, Managing Director, ASAPP Media; Ajay Thomas, Registrar, London Court of International Arbitration (India); Avadesh Singh, Deputy CEO, Egis India; Harish Mathur, Chief Executive, IL&FS Transportation Networks; Harsh Shrivastava, CEO, World Development Forum; Jyotinder Kaur, Economist, HDFC Bank; Kamal Verma, CEO, Srei Infrastructure Finance; Col SN Kuda, Executive Director, Ashoka Buildcon; SL Verma, Senior Vice President, Lanco Infratech; TK Amla, Head, Information, Liaison and Training & Asst Public Information Officer, CSIR; KV Pratap, Director, Infrastructure division, Planning Commission; Ashish Wig, Chairman, Indo-American Chamber of Commerce, Infrastructure committee; JL Khushu, Managing Director, Era Infrastructure; Rakesh Ranjan, Adviser (PCMD/HUA), Planning Commission; Palash Srivastava, Director PPPI & Programmes, IDFC; and BI Singal, Director General, Institute of Urban Transport (India). By the end of the three-hour discussion that touched upon the lack of progress in areas such as roads, power, urban infrastructure, finance and transport, one thing on which everyone agreed never mind the surfeit of irony was the need for more political iron and public involvement to drive development in the country. The key points discussed: Is there building of capacities in the various sectors or are we witness to mere planning talk? Raison D'ÐTRE for disputes leading to the holding up of infrastructure projects. Effectiveness of arbitration as a tool to speed up already delayed projects. Identification of areas of deficit and dismantling of current blocks. -òThe infrastructure investment gap. The human capital challenge and ways to overcome it. Technology solutions to fast forward road projects. Renegotiation of contracts. Ashish Wig, Chairman, Indo-American Chamber of Commerce: In the roads sector there is a need for correct data and in the case of toll collection the concessionaire needs the support of the police and the government machinery. PPP is the way forward - we have some of the finest minds in the world and we just need to put our heads together. Harsh Shrivastava, CEO, World Development Forum: The real challenge is to build pressure on elected representatives to ensure that there is faster implementation and completion of projects. Local aspirations must be taken into account right at the planning stage. There is a need to provide skill upgrade facilities for locals in the area where the project is happening. Information must be available on the economic costs of lost opportunity that, in turn, must be used to drive home the urgency of quick completion both to the locals and government. Also, citizens' groups should engage actively with government right from the project planning stage. Agencies should engage with locals during the project execution phase as was done by the Delhi Metro Rail Corporation (DMRC). That will build a groundswell of popular support for the project. Col SN Kuda, Executive Director, Ashoka Buildcon: There is a huge need for accumulation of accurate field data this must be owned by the client not consultant. We need to create an environment where engineers feel wanted. Unless you give time for planning, no projects can be done. We need to plan projects for the next 20 years. There is a need for 80 per cent of land being made available, and for all parties to ensure that there is forward movement. Jyotinder Kaur, Economist, HDFC Bank: We need credibility and accountability at every level. There should be stringent penalties for missed deadlines or violation of terms of contract. Our objective should be to ensure viable infrastructure investment. China's growth model is premised on infrastructure investment. Let us not run after targets. It is okay to fall short of targets so long as you do it with due diligence and create viable projects. TK Amla, Chief Scientist, CSIR We need to introduce another P to PPP to include People who live around the road while making an agreement. Taking people in confidence will help sort out land acquisition-related issues. We recommend employment of new materials and technologies by the contractors and the NHAI to make roads more durable. SL Verma, Senior Vice President, Lanco Infratech: To avoid arbitration and claims, there should be standardisation. We should look at all constructions from a future perspective. Manpower issue in the highways sector needs to be addressed, both in terms of quality and size. JL Khushu, Managing Director, Era Infrastructure: If we do not encourage the PPP model, we will never be able to do it in future years. We need a coordinated approach and a faster rate of disposal of disputes and more clarity in the matter of shifting of utilities; specifics of such plans must be attached to the schedule. We need to increase the number of skilled people working on projects. Rakesh Ranjan, Adviser (PCMD/HUA), Planning Commission: There is a concept of pre-bid discussion where all issues are discussed. Bidding is about risk. If you take a risk, you have to bear it. In the matter of capacity building as far as urban development is concerned, we need reform at the city level. The problem from the Government of India perspective is of governance and reforms. Year after year, the Ministry has not been able to spend the amount allocated to it. I would say, historically, India has never been able to make a plan at a city level. Planning should be at the centre of urban strategy. We need to create conditions for reform at the level of the city. In the roads sector, the issue is not about capacity building but the ability of the players to take up projects. The old NHDP road projects were easier to handle because of higher traffic density; there is not much enthusiasm now. There is definitely a decline in the investment climate of the country. Harish Mathur, Chief Executive, IL&FS Transportation Networks: We need allocation of risk among all stakeholders equally to ensure clarity and correctness in DPR, pre-bid negotiations, ensuring environment and forest clearances, and review of risks such as cost escalation at all stages. Palash Srivastava, Director PPPI & Programmes, IDFC: There is a need for a programmatic approach as opposed to a project approach. We need a system that will hold all stakeholders including the government accountable. While a sector regulator is fine, we should also have an ombudsman approach. Public information and consultation are also very important. Finance will follow opportunities. Kamal Verma, CEO, Srei Infrastructure Finance: Accuracy and accountability in providing road sector data and resistance to paying toll are major hurdles that need to be addressed. The government must use NGOs and the media effectively in spreading the message of the benefits of projects. There should be a regulator in the highways sector whose job would be to ensure how work can be made speedier. BI Singal, Director General, Institute of Urban Transport: I believe the concession agreement needs a relook. Dispute resolution should be sorted out across the table through internal discussions. Avadesh Singh, Deputy CEO, Egis India: There is need for human resource capacity building both in terms of quantity and quality. We need to churn out more engineers and increase campus recruitments. Suggestions must be invited for modification in the Model Concession Agreement. KV Pratap, Director, Infrastructure Division, Planning Commission: The private sector wants renegotiation of contracts citing unforeseen circumstances. We strongly feel that renegotiation is not the way to go. By doing so, you create problems related to the sanctity of contracts. Once you start renegotiation, all the gains of competition are lost. We need to write better contracts and enforce them with higher performance security. The whole idea of inducting private-sector investment into infrastructure projects was to allow them freedom to fail. We have to allow some projects to fail. On the must-do steps I would say: prepare the projects well; do not rush projects because that would lead to delays and disputes; have clear allocations do not renegotiate contracts just to reduce commercial losses of the private sector on account of opportunistic bidding. Our principle is to discourage renegotiations. Ajay Thomas, Registrar, London Court of International Arbitration: We need to look at institutional mechanisms to resolve issues, select the right kind of arbitrators, those with an understanding of infrastructure. In my view, a dream team would consist of a legally qualified person with an understanding of the infrastructure sector and contracts, a chartered accountant with number crunching abilities, and a good civil engineer. That would ensure a balanced tribunal. You need to have a two-tier dispute resolution clause where mediation can be the first option followed by arbitration or legal recourse. You also need to explore the concept of a dispute resolution board in the case of large infrastructure contracts where a panel of three experts is constituted at the start of the project. Their role is to oversee the project and nip any potential dispute in the bud.