![]() In fact, in Australia, the New South Wales government was successful at setting up bids for assets and getting high payments for them by industry standards. In practice, though, it may well be higher in view of competition among bidders who may be able to spot ways of making operations more efficient. Theoretically, the lump sum being received is just the present value of the cash flows the government would have got by owning and operating the asset. Stipulations for levels of service and pricing will of course be written into the contracts. These should, as far as possible, avoid recourse to the courts, to minimise delays. In addition, the Kelkar Committee also said there should be clearly laid down dispute resolution processes. That is the reason every sector where such assets are monetised must have independent regulators in place. That is why the Kelkar Committee clearly said, ‘The Committee cannot overstate the criticality of setting up of independent regulators in sectors that are going in for PPPs.’ These regulators must be staffed, not by retired bureaucrats or political cronies, but by private sector managers who have a working knowledge of the projects involved, experts in the subject and the big investors in the projects.įitness app Fitmint raises $1.6 million in funding round led by General CatalystĪnother objection to the monetisation scheme is that many of the assets being leased out are monopolies and the private operator may jack up prices in the future. In the absence of checks and balances, that may well happen. The assumption here seems to be that the asset will be sold for a song to the government’s cronies. Leaving aside the fact that it’s not a sale but a lease, why would any taxpayer object if the asset is sold at a fair value? After all, the proceeds from the sale will fund another bit of infrastructure, which can then be said to be funded out of the original taxpayers’ money. Some opposition parties have criticised it as selling off assets created by us taxpayers. AR is also suitable for institutional investors meeting their preference for brownfield assets with established revenue profile.’ It also allows long-term risk transfer and gains private sector efficiencies in asset management. Once the commanding heights have been built, they can be sold to private entities for routine operation.’ This would, said the committee, ‘start a virtuous cycle of fresh investment fed by additional revenues.’Ĭonsider what the World Bank has said: ‘For the public sector, AR (asset recycling) offers a unique opportunity to receive upfront capital from the private sector in lieu of future income from those assets. As the Kelkar Committee said: ‘while the government has a major role in building infrastructure, should it maintain and operate roads or power stations? No, not at all. But once the project is up and running, the government can monetize it by leasing it out to private sector players. The initial investment in infrastructure is therefore best left to the government, which can not only bear the risk but is also able to finance it more cheaply, as its borrowings incur lower interest costs. Greenfield investment in infrastructure is difficult for the private sector because of the high risks involved. The logic behind the recycling of assets proposed by the National Monetization Pipeline is simple: the way for the government to spend more on infrastructure without increasing taxes or the fiscal deficit is to lease out existing government assets and use the proceeds to make greenfield investment in physical or social infrastructure. PhonePe Beat of Progress Powered by Moneycontrol.Pharma Industry Conclave Unlocking opportunities in Metal and Mining.The Challengers Life Insurance Made Simple.Interview Series Business In The Week Ahead.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |