Journal of Infrastructure Development

This case study uses primary evidence from the Rift Valley Railways concession—a complex multinational rail concession originating from Mombasa (Kenya) and to Kampala (Uganda)—to discuss strategic roles of multilateral development banks in infrastructure project finance. We find that multilateral development banks were uniquely positioned to play the roles of advisor, honest broker, guarantor and financier required in this transaction. However, we document a number of shortcomings in execution which adversely affected the performance of the concession. First, procurement flaws resulted in the choice of an under-qualified lead investor, and subsequent non-performance of the concessionaire. Second, there was failure to ensure compliance with loan disbursement pre-conditions. Third, governments had unrealistic expectations about the concessionaire’s capacity to improve the railway’s performance and make major capital investments. Extensive due diligence on the lead investor prior to concession award could have circumvented concession restructuring. As investors become more interested in opportunities in Africa, more entities should provide advisory services to African countries. However, such entities should have adequate resources and capacity to remain engaged over a long period.

Public–Private Partnership (PPP) has been a relatively successful model for infrastructure development in India. However, investment of private capital, especially foreign investment, is far from satisfactory keeping in mind the estimated investments of the Government under the XIth and XIIth plans. Several issues have been identified which include evolving a robust legislative framework and a well-balanced concession agreement. A major area of concern at the stage of contract management is the setting up of an efficient and credible dispute resolution mechanism which would ensure settlement of disputes in a time-bound manner. Apart from litigation, several alternative modes are being followed in India like amicable settlement, mediation, arbitration and expert adjudication. This article analyses the various practices of dispute resolution mandated in central and state legislations, policy documents and industry practices. In an attempt to suggest the most viable approach to dispute resolution in core infrastructure sectors, it will also establish the inter-relationship between private investment and dispute resolution mechanisms.

Infrastructure is a key area since it provides the main thrust and impetus area in the growth of a developing nation like India. A major area of concern for sustaining the real gross domestic product (GDP) growth in India has been the lack of adequate infrastructure, which can support the growth process. The deplorably low levels of public investment have rendered India’s physical infrastructure incompatible with large increases in the national product. Clearly, without improving the rate of infrastructure investment, the expected growth rate of 9 per cent and above at best would remain modest. The Planning Commission of India has estimated that investment in infrastructure sector defined broadly to include road, rail, air and water transport, electric power, telecommunications, water supply and irrigation will need to be of the order of about ₹45 lakh crores or US$1.4 trillion during the 12th Five-year Plan period. India has one of the largest road networks in the world, aggregating around 33 lakh km; historically, the budgetary resources from the governments have been the major source of financing for infrastructure such as road projects in India. This article focuses on Viability Gap Funding (VGF) that has been used for financing of infrastructure projects and specially for road projects in India. The purpose of this article is to examine and analyse viability of the VGF scheme for Indian road projects by studying projects being covered under the VGF option.

Rail-based ‘Mass Rapid Transit System’ has been widely accepted as a solution for most of the traffic and environmental pollution related problems which major cities throughout the world are facing now. Metro rail construction activities are being undertaken in a big way in India, existing metro rail network of the city of Kolkata and Delhi are being expanded, while it is under various stages of construction in cities like Bengaluru, Chennai, Mumbai and Hyderabad. In the present article, important environmental and other critical issues have been discussed in the Indian context which are equally relevant in other developing counties.

Successfully implementing public–private partnerships (PPP) depend on the establishment of effective policy and institutional frameworks. While such factors play a significant role, practitioners often face obstacles posed by other less visible, and often indefinable, factors. The purpose of this article is to identify such X factors which had delayed the delivery of the National Highway Development Programmes in India, where well-defined policy and institutional frameworks are in place. This article finds that the entangled nature of inter-agency relationships and the resultant faulty selection of PPP policy options were the root causes of delay, which then invited a chain reaction that slowed down the entire process.