“In particular, these more developed PPP markets typically feature well-developed regulatory frameworks, largely standardised project contracts, a large and sophisticated investor base and predictable project pipelines,” Moody’s said.
There has been a large decline in private investment in PPP projects in recent years for a number of reasons, including delay in project approvals and land purchase by the government, complicated dispute resolution mechanism in concession agreements and lower than expected revenue due to aggressive assumptions, it said.
Delay in project completion has resulted in cost overruns and revenue losses to private concession owners.
These factors have impacted the financial viability of some projects and their ability to service debt.
The poor performance of some infrastructure projects, including PPP, has been a source of stress for both developers and the Indian banking system, it said.
The Financial Stability Report (FSR) of the Reserve Bank in June stated that infrastructure, which accounted for 14.2 per cent of total advances of the banking sector, accounted for 34.4 per cent of restructured standard advances and 13.9 per cent of gross non-performing assets of commercial banks.
From Agencies, Feature image courtesy groundcontrol
