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PROCESS FRAMEWORK
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Offering a level playing field :
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To send right signals to investors, GIDB's mandate is to pave way for fast-track implementation of infrastructure projects. Removing policy related or other bottlenecks, GIDB identifies and gets projects prepared, conducts feasibility studies, recommends risk-sharing mechanisms and monitors the progress of projects.
Because of the long gestation periods of infrastructure projects and the high risks attached with infrastructure projects, developing an infrastructure project is like putting together a jigsaw puzzle. To reduce the consequent uncertainties attached with these projects, the Board has worked out a cycle for their implementation. This, of course, is only a broad framework to bring in better focus. |
| Project life cycle : |
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| Project Life-cycle government Funding or through PSP |
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| Process Cycle PPP Projects |
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This project cycle is supported by the Law on PSP in the State, called 'The Gujarat Infrastructure Development Law' (the BOT Law of Gujarat). This is a unique document in the country and also a very progressive one in its approach. In the country, of course, there are other sector specific laws and policies, which support the various stages of the project cycle, and are, project specific.
The BOT Law, the fountain head of Project Cycle, establishes procedures for private sector participation. The first of its kind in the country, the BOT Law has been evolved after consultations with the Industry, Investors, Developers and various other agencies. |
| Project identification : |
| This first stage of the project cycle is very crucial to successful implementation of any infrastructure project. It has been shown that many of the States have faltered in the development of infrastructure because of lack of comprehensive planning framework. Gujarat has set itself apart by formulation of a plan document called 'The Gujarat Infrastructure Development Agenda-Vision 2010'. In 1998, the Board took up an extensive planning exercise for the various infrastructure sectors. |
| Project preparation : |
As stated earlier, infrastructure projects inherently have high risk attached with them. Conceptualization and preparation of a project to the stage where it's bankable requires considerable expenditure. The investment is at risk because of project failures.
GIDB has stepped in to fill this gap by undertaking project preparation exercise. Under this, it supports conduct of pre-feasibility studies for various projects that have been identified. If after pre-feasibility study a project is found bankable, it could be offered to the private sector for execution. These studies are conducted through reputed consultants. GIDB operates a revolving facility for carrying out pre-feasibility studies. The state government supports this corpus through budgetary grants. |
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| Risk allocation : |
| A successful Public Private Partnership entails distribution of project risks among the parties involved in its development. This is achieved through the mechanism of 'Concession agreements' which details the risk allocation. The State Government has already come out with such agreements for various sectors such as power, gas, road, etc. It is felt that upfront allocation of risk helps the investors in judging the project better and facilitates their decision making. The various types of concession agreements that the state government can enter into have also been specified in the BOT law of the state. |
| Selection of developer : |
Selection of developer is the key to successful execution of a project. Gujarat Infrastructure Development Board provides for a level playing field and transparent mechanisms for this. They are:
- International Competitive Bidding.
- Challenge route, which has a component of limited competitive Bidding.
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