Infrastructure Development, Regulation and Financing
Faculty Offering
Sebastian Morris
Senior Professor, General Management & Public Policy & Chair, Centre for Public Policy & Governance
- morris@gim.ac.in; chaircppg@gim.ac.in
- +91 9824232121; +91 832 2366733
Programme / Term
PGP, BIFS / V (at GIM); PGP, PGP X (at IIMA)
No. of sessions
Course description
Programme / Term
- To familiarize students with the special problems of infrastructure sectors, given the many market failures, with the traditional (state ownership, regulation) and modern (unbundling, marketization, incentive regulation) modes of determining services provision, and develop skills in understanding regulatory practices in a wide variety of infrastructure.
- In “public infrastructure” to develop approaches to public provisioning via for profit entities i.e. through PPPs. To develop understanding of the financing mechanisms for infrastructure and especially PPPs and the various risk allocation models.
To understand the issues relevant to regulation and structuring, to the development of domestic capital markets and the role of foreign funds. - To develop the skills and understanding necessary to structure, appraise, finance and implement infrastructure projects in sectors such as power, and transport (including rail, roads, air and ports).
- To bring to the students the experience of India from 1997 onwards in the major infrastructure sectors (other than telecom).
- To understand and appreciate the language of regulation and private participation in infrastructure.
1. Core Courses
Market failures (revision). The natural monopoly in history. Regulatory experiences. Deregulation. Gas, electricity, telecom, natural gas networks. Incentive regulation.
Social cost benefit analysis. Social, private and public value. Innovations in regulation. RPI-X.
Marketisation. Created markets in electricity and gas.
The appropriability failure and public goods. Subtractability. Tariff mechanisms. Value creation through privatization.
Public Private Partnerships and their design in a variety of contexts. Endogenous risks, risk allocation mechanisms. Case studies of PPPs. PPPs in water and sewerage sectors. Financing infrastructure. Design of PPPs. The risk allocation framework.
Capital markets and infrastructure. Brownfield investments. The experience of India in detail. Take-out financing. InVITs.
Basic transport economics. Design of road networks.
Land acquisition, land markets and land aggregation. TP Schemes, TDRs.
Methodology
Students are expected to have gone through the core readings and cases, before they come to class. They are expected to raise the issues for discussion and resolution. On a day when the readings are heavy they are expected to go through the readings in their groups, sharing and discussing the same.
Group Projects and Journal
For whom
- Students seeking a deep understanding of the new opportunities in PPPs and private capital in infrastructure, and willing to work hard would find the course engaging and useful.
- Consultants in government and infrastructure verticals, developers, regulators, and senior (credit) staff of BSFIs seeking to finance infrastructure projects, would find the course very useful saving them many years of learning on the job. Prerequisites for the course would be basics of microeconomics, capital finance, and financial markets.
- Students should have a sound knowledge of basic concepts in financing, microeconomics, and organizational management. This course would not suit the causal attendee.
Evaluation
Title
Percentage
Class Participation
30%
Exam/Individual assignment/Journal**
30%
Group Project
30%
TOTAL
100%
Section wise outline
Session Seq /Date & Time
Topic
Cases/Readings
1,2 and 3
Market Failure Regulation and Public Ownership in Concept and in History
Readings Rajan, R. (2000). “Market Failure and Intervention by the State”, IIMA Case. Mansfield, Edwin (1985), Chapter 16 “Public Goods, Externalities and the Role of Governments”, in in Mansfield, Edwin (1985), Microeconomics – Theory and Applications, Fifth Edition, W. W. Norton and Company, New York and London
4 and 5
Innovations in Regulation
Readings Decker, Cris (2009), “Characteristics of Alternative Price Control Regimes”, OFGEM, 2009.
6 & 7
The Challenge of Financing in a Liberal Financial Market
Readings Morris, S. (2001), “Issues in Infrastructure Development – The Interlinkages” Chapter 1 in Morris, S. (ed.) (2001) Varma, Jayanth (2001), “Regulatory Dilemmas in Infrastructure Financing”, Chapter 4, in Morris, S. (ed.) (2001)
8
PPPs an Introduction
Readings Pollitt, Michael G (2009), “The Declining Role of the State in Infrastructure Investments in the UK”, Working Paper, Judge Institute of Management, Univ. of Cambridge. Morris, Sebastian (2004), “Overview”, in IIR2004 up to p.14 slipping into recession.
Reference Books
- India Infrastructure Report: 2001: Issues in Regulation and Market Structure, Oxford Univ. Press (https://www.researchgate.net/publication/334194110_INDIA_INFRASTRUCTURE_REPORT_2001_-_ISSUES_IN_MARKET_STRUCTURE_AND_REGULATION )
- India Infrastructure Report: 2002: Governance Issues for Commercialization, Oxford Univ. Press. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2289223
- India Infrastructure Report: 2003: Public Expenditure Allocation and Accountability, Oxford Univ. Press.
- Indian Infrastructure Report: 2006: Urban Infrastructure, Oxford Univ. Press. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2182502 https://www.idfc.com/pdf/report/IIR-2006.pdf
- India Infrastructure Report: 2004: Ensuring Value for Money, Oxford Univ. Press
- World Bank https://ppiaf.org/knowledge
- https://www.pppinindia.gov.in/toolkit/pdf/case_studies.pdf
- Gajendra Haldea http://www.gajendrahaldea.in/published-books.asp
- https://www.researchgate.net/publication/266880813_International_handbook_on_public-private_partnerships
Institutions where the course is offered
GIM, IIM-A