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Large PPPs like BIAL - ripe for corruption?

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Written By admin123 - 25 July, 2008

BIAL Bangalore PPP Corruption RTI Transparency

[A Request - This is a carryover from talk of corruption and transparency that emerged in this HAL-BIAL thread. Please don't drag the peripherals like big people wanting airport in their backyard etc into this. Add your wisdom and tips that are relevant here.]

We really want to understand this. What are the transparency and disclosure norms for PPP (Public Private Partnership) Projects? Looks like they don't come under the purview of RTI Act, at least the matter is not settled yet (We believe BIAL has filed an appeal against a court verdict that put it under RTI). Does lack of transparency set PPP projects up for corruption?
Simply put, PPP is "project based on contract or concession agreement between a Government or statutory entity on one side and a private sector company on another". There are several ways in which government and private sector can get involved. Leave aside the private sector (they bring in Management or asset maintenance skills, operational expertise, or just offer goods or services), lets look at the ways in which governments brings things to a PPP to make it attractive to Private parties. These would be:

  • Provide investment capital by using tax money
    • Ex: GoK investing in BIAL?
  • Offer long term contract to consume services of the PPP, thus making it more attractive for investment
    • Ex: I promise to buy all your power at rate X. Or, for BIAL: I promise no airports in 150 km radius.
  • Investments not in cash but kind - offer goverment land, or stale assets (land at concessional rates to NICE for BMIC, land for BIAL as well)

Now, when we talk about small sized PPP initiatives, say 10 crores to build a road, arguably, it is easier to watch and say if the money has been spent and used well. How do we do that for a large project like BIAL?

  • Government provided land at subsidized rates to BIAL (this would be investment in kind, not cash)
  • Government has further invested some cash in the venture. ??? crores (GoK and AAI combined). This is our money, comes from the taxes we pay.
  • BIAL is a Rs 2500 crore project. this amount doesn't include the 'value' of land the the state government brought in.

Forget the land dealings, thats a messy thing to get deep in. Let us talk about the accounting aspects of BIAL.

  • How do we know that the airport is worth Rs 2500 crores? For lack of access to a detailed account or report in public domain, if one looks at Hyderabad Airport (another PPP) for comparison, it certainly seems bigger and more lavish with lot more visible concrete construction
  • BIAL must be submitting detailed accounts and financial reports about its investment. why are those not in public domain?
  • Who is the auditor for this super sized PPP project? If there is none, can we, the public, get Lokayukta involved?

The worry we have is this, and fairly simple to explain. How do we know that the following has not happened:

  • BIAL says they spent 2500 crore to build the airport
  • But they may have spent only Rs 2000 crores
  • The unaccounted money may be with BIAL themselves, waiting to be spent, or, may get 'shared' between whoever is supposed to watch over the accounts of this PPP.
Please note, we are not saying - is BIAL a scam? We have no proof or credibility to make such tall statements. But how do we know? What we are asking for is - since its a PPP, who should carry the burden of transparency? Public, government, or the private enterprise itself?

Understand that its important for us to know and tune the workings of large scale PPPs really well. PPP is being touted as the cure-all model for our infrastructure woes, and we don't want this excellent idea to fail due to lack of transparency and accountability.

COMMENTS

Anonymous Coward

shas3n - 25 July, 2008 - 15:37

bialterminal, although the term 'anonymous coward' might seem a bit derogatory, it is a common internet ‘lingo’ word to indicate people who wish to remain anonymous. The derogatory overtones of the term are not present anymore, but we can of course think of better sounding names to use on praja. Here is more information on the origins and meaning of the term. http://en.wikipedia.org/wiki/Anonymous_Coward -Shastri

Not the full list !

kbsyed61 - 25 July, 2008 - 15:45

SB,

It looks like all the pages has not been posted here. Actually the 8th page in AAI_Reply_02_BIAL document contains some answers that clearly indicts AAI rather than private partners.

Could you pls post these documents in its enterity?

P. S. I have emailed you these docs. 

Syed 

Channelise the Clout in right direction.........

kbsyed61 - 25 July, 2008 - 04:49

BT,

Before we jump the gun, I would suggest that Praja should have a definite and well defined plan of action to take on BIAL issue specially against AAI & MoCA. I am not sure just collecting the info would change anything. Unless it is followed up with some action resulting in intervention by the government authorities or court to fix up the bunglings due to corruption and political/business nexus.

Answers to the following question should help in formulating the objectives in BIAL-Action Plan:

  1. What is that we expect from BIAL as a airport project for B'lore?
  2. What is that BIAL failed to meet our expectations?
  3. If BIAL has failed the decent airport dream of Bangalore, who is responsible for this failure?
  4. What can be done to mitigate the BIAL failures if any?
  5. What could be the Praja's response to this crisis?
  6. How does we can help Praja realise this response?

SB and others, can we form a Airport Work Group to take up this issue and see that Bangalore's dream for a decent airport is not shaterred.

Syed

anonymous coward

tsubba - 25 July, 2008 - 15:53

"we can of course think of better sounding names to use on praja." like tarlesubba or silkboard or even bialterminal perhaps? :) but their is a caveat. how do you sift between genuine off the record stuff and sky is falling type of rumours? important to blow whistle but need to be careful.

RE: BIAL vs HAL

Devesh - 2 August, 2008 - 08:24

I too dont see how HAL would provide competition for BIAL. The only competition would be "which airport can I get to faster."? And than frankly, is not the airport's problem nor should it be.

Narayan, in fact it will be the other way around. You are right in your assessment. The primary selling point of HAL is its location. However, we fail to realise that the HAL will also make a good low cost terminal, ideally suited for regional traffic and low cost airlines. The economic boom in India has shown us, there is plenty of space for both a high cost high feature as well as a low cost low feature approach. 5 star restaurants run side by side with darshinis. So do the Business Class of Jet or KF alongside Deccan, Spice, and Indigo.

Due to the extreme overloading, we have never appreciated the true size of the HAL terminals. Even I found it hard to believe, till I saw it with my own eyes, the international departure hall at HAL is bigger than BIAL's.

I have been interacting with the AAI folks at Bangalore for 5 years now. They are very different from their lethargic bosses in Delhi, and even the airport directors we had since 2005 onwards. The 2nd rung management, i.e. GM level on down, are energetic and full of ideas. I see BIAL forcing HAL to raise their service levels and quality of infrastructure, becuase of competition.

We passengers or even industry are not the customers of the airport. It is the airlines. We are the airlines' customers. Two airports will allow for airlines to demand the best from either airport. BIAL in terms of value delivery, HAL in terms of service levels delivery.

Today, BIAL is the only airport in the country that charges for use of the PBB (Aerobridge). So airlines ask for a remote bay instead of paying. In absence of another airport, that is their only choice.

As an example of choice. Today Singapore Airlines, which I am sure we will all agree is one of the best airlines in the world, is loosing cargo business, in Bangalore. Why ? Because they have tied up with AI-SATS cargo terminal. And AI-SATS, despite significant improvements, is still way behind Menzies Bobba in readiness and service delivery. SQ cannot change, since it owns SATS, so importers are preferring airlines who use the Menzies terminal. I, as a cargo customer, can only request SQ to interact with SATS. I can go so far as to suggest they shift, but if they don't, I have a choice to move my business to another airline.

With HAL and BIAL operating. Airlines will demand better value. From BIAL lower prices, from HAL higher service. At the end of it, both airports will have to become leaner, meaner organisations, and we will benefit as a whole.

I reproduce an anonymous comment, I received on my blog, on March 19th. I think it is very relevant, not about airports, but more about market places in general.

There is more than enough commerce in Bangalore to support another airport. Speeding up travel of people and products only improves an economy.

The market place, consumers and producers, determine usage. Government can implement rules of conduct (procedures) but no one, including the self-proclaimed smartest people in the world, often found working in government, can accurately predict a marketplace. The market place determines itself.

If consumers of airport services do not find the airport a convenient and profitable place to do business, it will not be used.

Ultimately, it is the competitive market place that demands strong value propositions, that will squeeze out and ensure that the PPP is free of corruption.

-----------------------

Regards

Devesh R. Agarwal

Visit my aviation blog at http://aviation.deveshagarwal.com

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