ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Renegotiations in Long-term Infrastructure Contracts

Private participation in infrastructure development in India has been an important resource, but is at stake with recent developments, especially with regard to renegotiations, as they seek to override the Model Concession Agreements on unjustifi ed grounds. A comment on the implications of opportunistic renegotiations on public-private partnerships.

Views expressed are personal.

In April 2013, the Central Electricity Regulatory Commission (CERC) granted relief to the Tata Mundra and Adani Mundra imported coal-based power projects by agreeing to reopen signed long-term power purchase agreements. Many road projects, including the recently awarded GMR Group’s Kishangarh-Udaipur-Ahmedabad project, are also seeking relief after contract award through renegotiations. The road ministry plans to include renegotiations explicitly in the terms of reference for the proposed road regulator.

These developments do not bode well for private participation in infrastructure in India. It is an acknowledged fact that our infrastructure is a cause of concern, apparent from the state of our congested roads, railways, ports, and airports and the poor quality of our power supply. In fact, the World Economic Forum, which ranks India 56th out of 142 countries, identifies inadequate supply of infrastructure as the most problematic factor for doing business in the country (World Economic Forum 2011).

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