Shekhar Dasgupta Managing Director Oracle India Ltd. November 4 th, 2003 Public Private Partnership e-Governance Summit, IT.COM

2 Why PPP ? E-Governance projects are Infrastructure projects Large investments required into an area that is not the core competence of the Government Leveraging Government’s limited resources Multiple risks involved –Technology risk –Financial risk –Operational risk –Acceptability risk

3 Non-Financial Considerations Accountability Specialized skill requirements Sticking to core competency Ease of scaling up AND scaling down Knowledge of specialist organizations for e- government projects Availability of Project management skills

4 What do Private Partners Bring ? Finance Appropriate Technology Bear risk of technological obsolescence Appropriate Solutions Manage Operational risk Competition Tremendous Experience Accountability

5 Contribution of Private Partners Financial Participation Carrying out feasibility study Developing the model of e-governance Designing the right architecture Choosing various options for the Hardware Designing the software applications Developing content and Content Management Network design and network connectivity Managing technology infrastructure Managing Obsolescence

6 Effect on Industry Private players can achieve better economies of scale Can leverage the experience gained Can potentially provide similar services to governments abroad, especially for non- mission critical activities Provide productive employment

7 ROI* - Step Towards PPP Financial: reduced costs of government operations /enhanced revenue collection Economic development Reduced redundancy: consolidating and integrating government systems Fostering democratic principles Improved service to citizens and other constituencies. *Source : High Payoff in electronic Government, Measuring the return on e-government investments, Intergovernmental Advisory Board Federation of Government Information Processing Councils

8 E-Governance Metrics Financial measures, such as return-on- investment, cost-benefit analysis, including net- present-value and internal-rate-of-return Indicators of public approval and acceptance, such as customer satisfaction measures and E- Gov take-up, or adoption, rates Benchmarking Balanced scorecard measures Business cases Portfolio analysis and risk management.

9 Costing Per transaction cost Monthly payments Hybrid models –Part per transaction and part monthly –Monthly payment for hardware and per transaction payment for operational costs Costing based on citizen satisfaction and penalty factors

10 Option 1 Pros One-time deal with reduced vendor dependence Ownership of the total solution Cons Need to recruit and manage high-cost IT specialists Need to manage complex high-technology Constant threat of asset obsolescence Need to manage procurements from multiple parties Outright purchase of all hardware and software components

11 Option 2 Pros Reduced initial cash outflow Flexibility of re-negotiating the solution Govt need not get bogged down in managing technology – govt. need to manage only deals Protection from asset obsolescence Reduced “business risk” Cons All solution requirements may not be feasible to be modeled in this option Frequent end-pricing negotiations may be required Govt. does not own the solution Solution Integration Issues Information of Govt costing required Payment to third party on per transaction basis

12 Option 3 Pros Reduced initial cash outflow Flexibility of re-negotiating the solution Govt need not get bogged down in managing technology – govt. need to manage only deals Protection from asset obsolescence Cons Govt. does not own the solution Payment to third party on monthly basis

13 Mechanisms of PPP BOO (Build Own Operate) BOT (Build Operate Transfer) BOOT (Build Own Operate and Transfer) Joint Ventures Private Finance Initiatives Special Purpose Vehicles

14 PPP Issues Security of data –Technological –Espionage abetted by private party Privacy of the data –Is the private player using appropriate technology for enforcing privacy ? Conflict of Interest –The private party bids for tenders for other projects while having access to all tender data

15 Path to PPP Find ROI of the Project Do Cost- Benefit Analysis Decide mechanism for Private Partnership Select Right Private Partners

16 Is India New to PPP ? Golden Quadrilateral and North- South, East-West Corridor –The largest infrastructure project in the history of independent India Key learning's –Facilitation by government is critical –Flexibility and innovation are imperative –Trust in the private partner –Monetary incentives for a job well done and penalties for slippages

17 Q & A Thank you