Clean Ganga Project: Using a PPP model to rejuvenate the river

• Main Authors: PHANG, Sock Yong, JOSEPH, Flocy, Chan, Chi Wei
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Infrastructure and Urban Development; public-private partnerships; risk management; stakeholder relations; Economics; Growth and Development
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/455; https://smu.sharepoint.com/sites/admin/CMP/cases/SMU-23-BATCH%20%5BPDF-Pic%5D/SMU-23-0005%20%5BClean%20Ganga%5D/SMU-23-0005%20%5BClean%20Ganga%5D.pdf?CT=1683620293674&OR=ItemsView
• Institution: Singapore Management University

Neeraj Gupta, Principal Investment Officer at the International Finance Corporation (IFC), led the IFC team tasked with assisting the Indian government to structure water sanitation Public-Private Partnership (PPP) projects along the Ganga River. India depends heavily on the river to support its agriculture and manufacturing sectors. Additionally, the river also held religious significance for Hindus. However, inadequate sewage treatment infrastructure had caused the river to become severely polluted. In the past, initiatives launched by the Government of India to clean up the river had been unsuccessful. In August 2011, the National Mission for Clean Ganga (NMCG) was established to help states reduce pollution and implement environmentally sustainable development. However, the lack of expertise and financing made progress slow and external support and advice from the World Bank and IFC was sought. In 2015, a team from the World Bank Group consulted with various stakeholders to understand the problems faced. This time, instead of using the traditional Engineering, Procurement and Construction (EPC) Model, Gupta introduced the Hybrid Annuity Model (HAM) PPP model to address the concerns of both the government and private sector investors. The PPP structure would allow the government to save on the capital outlay as well as engage private sector expertise. The HAM structure allowed for sharing of risks between the private sector partners and the government. The HAM model was successfully trialled in a few pilot projects and Gupta hoped that it would pave the way for more similar projects along the river. This case may be used for graduate, postgraduate and executive education classes. By analysing the case, students should be able to understand how different types of PPPs are used in the infrastructure sector, compare the traditional EPC model with the HAM PPP model, understand the risks that private investors in infrastructure PPP projects care about and risks allocation through financial structuring of a PPP and appreciate the implementation challenges for a PPP infrastructure project.