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Land allergy bites Bengal’s magic pill called PPP

Calcutta, July 5: The Bengal government’s hands-off stand on land has found its way into its PPP policy, the public-private partnership mantra that was supposed to neutralise adversities and make the state attractive for investors.

The new triple-P policy, notified by the state finance department on June 21, makes it clear the state government cannot acquire land for private investors even if they are willing to partner the state in its pet projects.

The notification replaces a policy the Left government had framed in September 2006, in which it had committed to potential partners that it would offer land for joint-venture projects.

“This is a clear departure from the state’s previous policy as the new dispensation is against any role for the government in land acquisition,” said a senior official at Writers’, wondering about the impact of the change in the nine-page document drawn by the finance department.

The document was circulated among secretaries of all the departments yesterday. The model policy is supposed to be uploaded on the state government’s website — www.banglarmukh.com — in a fortnight.

Based on the model policy, various government departments are expected to identify and conceptualise the projects to be developed and invite private players to partner the government.

Chief minister Mamata Banerjee, who had got hooked on the PPP model during her stint as railway minister, is banking on joint initiatives with private players to develop infrastructure like roads, bridges and airports. The chief minister, who has often acknowledged the government’s inability to spend because of financial constraints, had also invited private participation in health care, education and tourism.

The new PPP policy, however, may become a stumbling block in achieving the objective of joining hands with the private sector, said a senior state government official.

An infrastructure finance analyst echoed him. “Such a policy will take away the incentive of joining hands with the government as the government provides the land in almost all infrastructure projects under the PPP model,” said the analyst who did not want to be named.

According to him, private players will find it difficult to buy land for big infrastructure projects — like roads, ports, airports — as finding large tracts of contiguous land in a state like Bengal, with fragmented land holdings, is not easy.

“Besides, if the private players have to bear the cost of land, their cost will rise significantly. Even if the government allows them to levy user charges, recovering the cost will take too long and make the projects unattractive,” he said, adding that all other states have provisions for arranging land for private investors in PPP projects.

States like Maharashtra and Tamil Nadu, which have become pioneers in attracting investments in infrastructure projects, facilitate land for the private partners through agencies like industrial development corporations and infrastructure corporations.

“Bengal’s previous policy had the provision of arranging land for private partners through the WBIDC (the West Bengal Industrial Development Corporation),” said an official.

A minister in the Mamata government said although it was not mentioned in the new policy, the state would try to arrange land from its land bank when important PPP projects come up.

But officials said this could not be a solution as the state does not posses contiguous land parcels — a primary requirement for roads, bridges and airports. “This apart, infrastructure cannot be set up in areas wherever land is available. They are needed in areas where there is a specific need,” an official said.

The new policy, however, has stated that the government would provide legislative support, administrative support that includes receipt of all central and state government clearances, assistance in all rehabilitation and resettlement activities and supply of power and water at the project site.

“These cannot be termed incentives for projects with a long gestation period. Investors will certainly look for incentives. If investors are asked to buy land for the project, it is tough to believe that the state would attract large investment in infrastructure projects,” said the official.

Many industrialists were keenly waiting for the state’s PPP policy, expecting some sign of flexibility on land. “The new PPP policy makes it clear that the mindset of the new government is yet to change. This is discouraging for those who were waiting for the policy,” said an industrialist.