RISK PROFILE OF PPP ROADS IN INDIA

Different risks come into play as the PPP road project evolves through the various phases of development from development phase to construction and operation phase. Different categories have been suggested in literature to identify and classify the risks. In case of PPP road projects, various risks associated with the projects can be classified into groups depending on the particular phase of the project lifecycle. Table 1 shows the risks associated with the different phases of Indian BOT road projects. Amongst the risks, the traffic revenue risk is one of the critical risks with the widest disagreement amongst the stakeholders on who is best able to manage this risk.

Table: 1 Risk Profile of Indian PPP Road Projects

BOT (TOLL) MODEL

In the BOT (Toll) model, the commercial and technical risks relating to construction, operation, and maintenance of the projects are allocated to the concessionaire. The traffic revenue risk, which is one of the critical risks associated with PPP road projects in India, is also allocated to the concessionaire. The indicative risk allocation matrix for the BOT (Toll) road project is presented in Table 2.

Through a two-stage bidding process, the concession is awarded to the concessionaire. In the first stage (also known as qualification stage) bidders provide the information specified in the request for qualification. The pre-qualified bidders are then invited to submit their bids. Bids could be invited for the project on the basis of the lowest financial grant that would be required for implementing the project. Instead of seeking a grant, the bidders could also offer to share the revenue or make upfront payment to the granting authority for award of the concession. The grant/revenue sharing constitutes the sole criterion for evaluation of the bids and the concession is awarded to the bidder quoting the highest revenue sharing. In the event that the bidder is not sharing the revenue, then the concession is awarded to the bidder seeking the lowest grant.