The Gujarat Infrastructure Development Act - BOT law by the State

Gujarat Infrastructure Agenda Vision 2010 identifies a gigantic investment requirement of Rs. 116,993 Crores. Obviously all the requirements of the plan cannot be met by budgetary resources of the government. Innovative means have to be identified to finance this huge requirement. Private sector participation comes as a very obvious solution. Traditionally, private sector participation in infrastructure is deterred by the fact that these projects are risky and of long gestation periods. Also, here risk mitigation becomes of prime importance.

Private sector participation is an area, which is relatively uncharted even though the State has fairly large number of privatised infrastructure facilities. It has been the experience that uncertain and vague policy framework creates ambiguity in the minds of creditors, developers and decision-makers in the Government.

Clear-cut framework not only enables quick decisions on the projects but also reduces the risk attached by the developers and financiers. It thus makes the State better avenue for investment. Reducing uncertainties would reduce costs as well as cut time. Therefore, based upon international best practices and experience of projects within the State and the country, Government of Gujarat has put in place a road map for private sector participation through this statute.

BOT law provides framework for private sector participation in financing, construction, operation and maintenance of infrastructure projects in the State. This law is based upon clear-cut enunciation of the project cycle required for timely and effective completion of infrastructure projects.

The sectors covered by the statute are within the ambit of executive authority, of the State Government, as enunciated in the Constitution of India.

It provides a fair, transparent and clear-cut mechanism for selection of developers, either through international competitive bidding, or through direct negotiations, with the very strong element of transparency and competitive arrangement.

It clearly delineates the type and extent of project support that would be available to developers.

While keeping the interests of private sector developers and creditors in mind, it ensures protection of public interests. It has also anticipated issues, which are likely to crop up decades from now.

It is a win-win situation. This law is the first of its kind in the country. BOT law in Gujarat is more than a mere public document.

Gujarat's pioneering step in creation of this statute is a bold, daring and innovative initiative that will open up hitherto uncharted paths.