For the past 6 weeks, Cindy Guan and I have been in Southern India, fighting heat, humidity and culture shock to conduct interviews and collect data for our summer research project. In conjunction with Professor Ashwin Mahalingam of the Indian Institute of Technology-Madras, we have been studying the roles of Transaction Advisors and Nodal agencies in the development of Indian infrastructure through Public Private Partnerships (PPP's), specifically in the realm of urban infrastructure.

The purpose of our research is to get a great understanding of these organizations--their processes, constituents, role in the PPP process, constraints they face that may be hindering the process, and their relationships to each other and the different levels of government (central, state, and municipal.) We are also focusing on their roles in building up government capacity, specifically at the municipal level, and their work in training the government to be learn the fundamentals of a PPP project so that they able to carry out projects without the "hand-holding" of one of these agencies. Finally, we want to compare what we learn from these organizations to understand the position India and these organizations hold in the timeline and framework of PPP's across the globe.

So, for the past 6 weeks, Cindy and I have been reading numerous papers, articles and documents to understand the present status of infrastructure and PPP's in India, as well as collecting data and conducting interviews throughout Chennai and Bangalore, two major metropolises in Southern India.

One of the most interesting things that we have learned is that, for both the Transaction Advisors and Nodal Agencies, they have had to drastically shift their motives, purposes and goals to survive. Many transaction advising firms have had to shift their purpose from asset creation to service delivery in order to stay efficient and alive. Most Nodal Agencies, although created with the purpose of being a financial intermediary and financier, have failed in their financing roles and have not built up the necessary financing strength, leading the majority of them to take more advisory roles in the process. In fact, we have not found one nodal agency in India that has stuck to its original aims and purposes, and many have been either shut down by the government or left to strictly advisory roles.

One of the major problems these two organizations is that the government has no laws enacted to use these bodies effectively, or even at all. There is no mechanism in place by the government to appoint the right transaction advisor, and because of this, many times the government picks an advisor that is ill-suited to work on a certain project. One of the major constraints facing nodal agencies is that the government is not bound to go through these organizations, which often results in the projects going to unskilled members of the government, and projects never getting to the bidding stage.

While the biggest constraint that faces both of these organizations is the lack of institutional capacity in the governments, especially in the Urban Local Bodies (municipal governments), both of these organizations are confident that with the various training programs and "hand-holding" techniques they have in place, the capacity is growing and strengthening. Most are confident that in the next 5 or 10 years, the local and state governments would be able to take over many parts of the PPP projects, leading them to take over new roles in the process--with the transaction advising firms always being there for a expert opinion, and the nodal agencies strengthening in their role as solely a financial intermediary. Without question, the next 5 to 10 years will be a time of monumental change and learning for these organizations and for the government.

Overall, it has been an amazing summer for both of us. We have explored much of what India has to offer, been immersed in a vibrant culture, met some extremely important and influential people in the PPP process, and are quite satisfied with all of the interviews we conducted and information that we have collected from these organizations.

Posted by rjorr at August 15, 2008 12:50 PM