smart cities bankability of projects is of considerable
concern because of weak regulation, market risks in-
cluding competition from the unorganised or semi-or-
ganised sector and a general reluctance of municipal
bodies to impose additional costs on the public through
enhanced user charges and/or tax burden.
Information inadequacy is another issue that plagues
urban local bodies. Most municipal bodies have limited
or no knowledge of actual service requirements of the
private parties, leading to skewed assumptions in terms
of the scope of work of a private party engaged to provide
services on its behalf. This problem continues during the
project feasibility and structuring phase and private sec-
tor bidders often bid blindly, either overestimating or
underestimating the investment required, leading to is-
sues in actual service delivery.
The other issue with PPPs in municipal services is the
lack of diversity in terms of modes of private sector par-
ticipation. Our current PPP model favours large private
sector commercial entities citing improved managerial
efficiency as the reason. This does not always translate
into appropriately scaled or scoped projects. It is a small
wonder then that very few PPP contracts in cities that5
The percentage
of public private
partnership
contracts in cities
that actually
reached fruition of
all such contracts
which were initiatedWhile the private sector has
evinced interest in smart cities,
there are several concerns
about the public private
partnership model