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I do not agree with Pankaj. Especially the last paragraph. Though I have come across proud signs announcing the existence of some garbage bins as "a MCD PPP project" (why on earth should any one look at profitability and bankability issues in matters of garbage disposal? What are taxes collected for then?). The genesis and need for PPP obviously lie somewhere else, which possibly have got something to do with the "complex, yet well known advantages of PPP." I also do not agree with the fast decision making part. It is a perception. Decision making can be equally fast in the government. The reason lies else where. Governments and their intervention are necessary. So the so-called slowness in the government can be addressed. To run to the private sector merely on the ground of expediting decision making processes, to my mind, may not be the ideal solution. That debate can be set aside for the moment.

It's good that the current debate has taken a turn towards risks. Among other things, risks and their ownership are also used to define the nature of the project. Why I doubted if a BOT model can be classified as a true PPP model because the 'public'does not bear any risk. So it's participation is not tell-tale. If a VGF of any form is involved, possibly yes. But then the quantum of VGF is a contentious area. There have been examples where project costs have been overcast. It is needless to say that overcasting the project cost may increase the quantum of VGF and to quite some extent reduces the so-called construction risk, We may not have to look very far for some such examples. If VGF is in form of handing over a landbank, it certainly is very contentious.

I would like to delve on the traffic demand risk, especially in context of metro networks. The traffic demand risk for metro networks is very different in nature from let's say a highway between two cities or a high speed train corridor between two cities. Anyone who has ever taken a metro ride in Delhi would know why. Before a metro system is envisaged for a particular city, I presume that someone has already done a study if that is the best possible alternative. It is an expensive proposition and there are other alternatives available. As far as I understand, they may not be the best model for cities that are just about expanding. At least they get planned else where in the world when the city has already become congested. When such considerations are done, the so-called traffic demand risk becomes very marginal. It is the job of the government to come to a conclusion that a particular city needs a metro network. If the government has done its job well, then it should not mind retaining this risk. If it has not, then it's a risk. It shall come back to haunt irrespective of the fact that it has been passed on to someone else.

By the way, ridership revenue hasn't justified metro networks any where. So there has to be VGF in some form. The construction risk would invariably be mitigated through a bail out as and when the time comes for it. I see merit in Sreedharan's statement that BOT models for metro networks would eventually turn out to be more expensive.

Metro networks work only when they are a network. Else they are infructuous expenditure. They are expensive at the same time. I do not know if it is prudent to have the same BOT guy for all the lines in a network. If anyone has the financial muscle to raise that kind of finance - through whatever means - it is the government. Even if someone else has, it would tantamount to monopoly. I have a preference for a public monopoly to a private monopoly. It may not be a great idea to have too many BOT guys operating. Besides the public-private synergy, there is a more significant synergy in matters of metro networks - that of the movable assets. If construction cost is expensive, the cost of rolling stock is a killer. The network has to be standardized. This is possibly why the successful networks all over the world belong either to governments or government undertakings. And why we are yet to hear about a successful metro network built on the BOT model.

Yes, I also agree with you, Pankaj. I have no doubt in my mind that the Mumbai Metro would be successful. Mumbai would not need a network. Reliance is a serious player. They are a global company. They would not need to raise money by extending the line to some landbank they possess. In due course, they would establish themselves as a serious global player in metro business. The same could have been possible for DMRC also. But then we strongly believe that a private entity works better than a government one.

Subhashish Nath