INTRODUCTION

Governments need to play a very important role in making PPP projects successful. After transferring the responsibilities for the financing, designing, construction and operation to private sectors, the role of the host government is not limited only to supervision and monitoring but need to play an active role in the preconstruction phase of a project. It is the responsibilities of the government to initially approve the use of BOT project and then identifies sectors in which private sector will be involved. The government also decides the procurement process, manages the procurement proceedings and defines the criteria of selection. Besides, playing the role of facilitator it is of utmost importance for governments to develop proactive policy to stimulate private sector participation in infrastructure projects. Therefore, in order to facilitate private sector participation, governments need to establish an enabling environment consisting of:

• Credible legal framework to facilitate infrastructure projects development through PPP
• An administrative framework to expedite implementation of PPP projects; and
• Government incentives and other forms of support to encourage private sector in PPP projects.

LEGAL FRAMEWORK

Setting up of a credible legal and regulatory framework is critical to the success of PPP projects as it deals with the fundamental legal issues such as enforcement of contracts, private ownerships, security arrangements, taxes, remittance of foreign exchange and profits. Inadequate legal & regulatory framework undermines the strength and effectiveness of contracts in PPP projects, and reduces the attractiveness of the project to private investors. This section discusses the seven basic elements of legal and regulatory framework to control the legal issues while implementing a successful BOT strategy.

1. Basic legislative authority for awarding BOT projects: Government should provide basic legal authority to private sector to build and operate a given infrastructure project. Its basic role is to procure and implement BOT project. It also includes passing regulations that defines the responsibilities of government agencies and ministries for development and implementation of the projects, the insurance of licenses & permits, central government approvals and mechanisms of administrative coordination. Similar kind of legislative arrangement has been set up by Government of India to facilitate procurement of BOT projects in the form of National Public Private Partnership Policy.
   
   
2. Enabling public legislation: The legal authorities should enact enabling public legislation to foster competition in areas previously under the exclusive control of the public sector such as land acquisition, in order to control delays in land acquisition & related matters. Enabling public legislation has been established by the Government of India to foster private sector participation in various infrastructure sectors. For example, in National Highways sector, Indian Government first enacted National Highways Authority of India Act, 1988 which paved the way for formation of NHAI. The government further reformed the legal framework by amending National Highway Act, 1956 in June 1995, which paved the way for private sector participation in development of National Highways.