Page 212 - DMGT302_FUNDAMENTALS_OF_PROJECT_MANAGEMENT

Unit 13: Regulatory Framework of Projects

Self Assessment Notes

State whether the following statements are true or false:
11. Unbundling solid waste management services for assigning individual components to
private companies and public agencies in Asansol and Durgapur, West Bengal

12. Politics can play both negative and positive roles in the process, and systems need to be in
place so that political pressure helps improve service delivery.
13. If local infrastructure projects are to access commercial investment from financial
institutions, capital markets, and private firms, it is important that services be delivered
on a sustainable basis.

14. The need for determining the true cost of service provision after factoring in O&M costs,
asset depreciation, environmental degradation, and social objectives.
15. Tariff subsidies are unjustified in the name of poor, although the poor are not usually
connected to the city networks as legal users.

13.7 Policy and Regulatory Reform

Policy and regulatory structures vary across Indian states. Environmental infrastructure projects
are affected by policies and regulations pertaining to the environment (e.g., water abstraction,
pollution, and land planning and zoning), social issues (e.g., subsidies, slum rehabilitation, and
land acquisition), and economics (e.g., grants, tariff-setting rules, and predictable revenue base).
Many of the state and central policy reforms that the FIRE (D) Program supported–including
local government authority to enter into contracts, legal and practical recourse for contract
changes, access to capital markets, municipal finance, reforms under the JNNURM program, and
even slum upgrading–affect how infrastructure projects are structured. In many ways, project
development is defined by the policy environment, and, therefore, the institution responsible
for coordinating project development needs to be well versed in legal and regulatory issues.
Since state governments, instead of central government, retain much of the regulatory and
policy authority relating to local infrastructure development, the central government requested
states to establish their own PPP-enabling legislation rather than create a national framework.
Some states–Andhra Pradesh, Gujarat, and Punjab–introduced cross-sector PPP-enabling
legislation. However, PPP provisions vary greatly across states and should still be considered
fledgling. Under JNNURM, states have the option to pursue PPP reforms. If desired, one of the
first steps, as articulated in the JNNURM PPP reform primer, is to establish enabling legislation
in accordance with the Model Integrated Solution.

13.7.1 Commercially Viable Projects

The project development approach that the FIRE (D) Program recommends stems from pilot
experiences over the past 17 years that have tested various institutional arrangements, all of
which were embedded within the local Indian context. No matter whether the resulting project
was fully public or privatized, the issues described in this chapter remain relevant. A project
may not use outside investment, but following a commercially viable format for project
development greatly increases the chances of successful implementation. No strict separation
exists between the planning activities and the formal project development process discussed
here. It is a continual and iterative process that depends on the level of detail required. The level
of detail required at a city-wide planning stage is more conceptual because the purpose is to see
how discrete projects fit together, how they contribute to the city’s overall development, how
local economic and land markets affect service demand, how to prioritize and phase long-term

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