Page 26 - Banking Finance July 2019

ARTICLE

Proposal and Need of the Hour is Private Partici- In Korea and the Philippines, however, very few projects
have been successfully challenged. In Chile the probability
pation
of a successful challenge appears to be high, though
Government is coming up with new projects of building three
experience is limited. In an effort to find the right balance,
major airports in Bangalore, Hyderabad and Calicut. Also,
some countries (such as Argentina) have begun to explore
power plants, transmission systems, roads, bridges, ports,
hybrid systems combining elements of the bonus system and
and steel plants. The need of the hour in present scenario is
the Swiss challenge system. However, in some countries the
private participation in public projects. The public sector has
proposer does have certain advantages.
to change its role from sole to co-producer of infrastructure
services along with the private sector. However,
Unlike, the lowest bidder will not be given the work order
government has to take the lead in providing a transparent
for the project. Instead, the participant who floats the
regulatory framework to ensure a fair deal for consumers,
design and concept for the project will have the first right
and a level playing field for all private parties.
of refusal.
If a government actively pursues private participation in
Presently, Private Participation though Swiss Challenge
infrastructure, the private sector is likely to come forward
Method is felt necessary due to its demand. India has a
with innovative ideas (including labour and risk management
requirement of investment worth Rs.50 trillion in
techniques). Sometimes governments invite cost effective
infrastructure sector by 2022 to have sustainable
proposals else even private players on their own approach
development in the country. Sectors like power transmission,
government. These are called unsolicited proposals and are
roads and highways and renewable energy will drive the
written proposals submitted on the initiative of the submitter
investment in the coming years.
for the purpose of obtaining an award with the Government
and are not in response to a formal or informal request. Attractive Opportunity
Although, Governments are under no obligation to accept
Only 24% of the National Highway network in India is
unsolicited proposals, but economic and political conditions
four lanes therefore there is immense scope for
compel them to consider them.
improvement.
Regional Connectivity Scheme (RCC) gives opportunity
Working of Swiss Challenge System
for development of airports.
The system basically works on two different patterns, it is
Favorable valuation and scope of earning make this
up to the government to decide as to which one they want
private & public participation more attractive.
to adopt. The two main ways are as follows:
1. The government can either purchase the intellectual
Competitive Nature of Bidding
property rights for a project concept from the
proponent or then award the project through a The first proponent has the innovative idea on the basis of
competitive bidding process in which no bidder has a that if any other generate some more viable and
competitive the same will be given cognizance and the
predefined advantage.
former also has the right of first refusal.
2. The government can offer the original proponent an
advantage in a competitive bidding process. In this case
Policy Support
the government should create rewards that satisfy the
Government of India is continuously working on the way of
original proponent while still allowing a truly competitive
removing/reducing bottlenecks in implementation of this
process.
method of project finalization.
However, it has been observed that in both the systems,
Advantages of Swiss Challenge Method
bonus and Swiss Challenge, it is not easy to find the right
1. Cut down red tap
balance between incentives to propose beneficial projects
and incentives for third parties to submit counter proposals. 2. Reducing time to award project

26 | 2019 | JULY | BANKING FINANCE