Risk allocation in concession agreements for PPP road projects in India

Abstract

Public–-private partnership (PPP) concessions for transportation infrastructure, especially road projects, have a high degree of risk exposure and complex nature of risk profile. This chapter studies the evolution of contractual allocation of critical risks for PPP road projects, in different generations of concession agreements (CA), for national and state highways in India. The scope of the study is limited to PPP projects in Indian national highways (NHs), expressways and state highways with toll-based concessions. Through literature review and subsequent questionnaire survey, land acquisition, revenue, permit/approval, cost overrun and political risks were identified as the most critical risks in Indian PPP road projects. The CAs for Ahmedabad–Mehsana Toll Road, Jaipur–Kishangarh Toll Road, Krishnagiri–Thopurghat Toll Road and the Planning Commission Model Concession Agreement (MCA) for PPP in NHs were reviewed to study the contractual clauses addressing different risks and the contractual risk share was rated in a seven-point bipolar scale, developed for this purpose, through discussions with the members of a focus group.