Delays ahead?

Inadequate expertise in the legal profession may create roadblocks in the infrastructure sector, argues A Balasubramanian of IDFC

The scope for conflicts to arise during public-private-partnership (PPP) projects is huge. One of the most common sources of such disputes is a breach of commitment by either the investor or the government. If left unattended, disputes have the potential to undermine investor confidence, dissuade new investors and seriously disrupt trade and the economy. For example, a dispute that affects the operation of a private terminal of a busy port could bring foreign trade to a grinding halt. It is vital, therefore, that any disputes affecting PPP projects in the infrastructure sector are dealt with quickly and effectively.

Unfortunately, many of these disputes are complex, and owing to the nascent stage of the PPP model in India (large-scale PPP projects have only existed for around eight years), there is little in the way of precedents to guide their resolution.

While legal practitioners and judges are expected to address and balance the delicate issues of equity, efficiency and accountability, they should also be able to appreciate the nuances of public policy, economics, technology and governance under the new disposition towards economic liberalization. This is especially true for infrastructure projects, where the public sector often plays a dominant role.

A Balasubramanian is the senior director of project finance at Infrastructure Development Finance Company (IDFC). Over the last 12 years he has financed and advised several domestic and international private investor consortia on port projects and has also been an adviser to the Indian government and the World Bank on port reforms in India.