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Part – I BENGALURU, MONDAY, 24, MARCH, 2025 (CHAITHRA , 03, SHAKAVARSHA, 1946) No. 184
PROCEEDINGS OF THE GOVERNMENT OF KARNATAKA
Sub: Revised “State PPP Policy for Infrastructure Projects – 2025”
Read: 1. G.O. No. IDD 01 UIP 1997 dated: 26.12.1997.
2. G.O. No. IDD 32 IDM 1997 dated: 16.07.2007.
3. Corrigendum Order No. IDD 59 ITS 2009 dated: 31.05.2010 &
16.08.2010.
4. Govt. Notification No. IDD 59 ITS 2009 dated: 01.06.2010 &
02.06.2010.
5. G.O. No. IDD 07 ITS 2010 dated: 08.08.2011.
6. Govt. Notification No. IDD 59 ITS 2009 dated: 19.05.2012.
7. G.O. No. IDD 07 ITS 2013 dated: 30.10.2015.
8. G.O. No. IDD 14 ITS 2018 dated: 17.03.2018.
Preamble:
1. The State Government introduced a separate Infrastructure Policy for Infrastructure
Development in 1997, vide G.O. read at (1). This policy was revised vide G.O. read at (2), (7)
and (8). ln the current scenario, with the updated guidelines by the Department of Economic
Affairs, Government of India and considering developmental trends in the market, the need
for formulating a new policy with a revised institutional framework and other relevant updates
has become essential.
2. Karnataka has embarked on an infrastructure-led development strategy. Recognizing the need
to develop high quality infrastructure as a means to achieve rapid economic growth and
considering the current economic scenario, the Government of Karnataka (GoK) has
formulated a comprehensive and well-designed "State PPP Policy for Infrastructure Projects
– 2025".
3. All the previous PPP policies will be superseded by the current PPP Policy in the State of
Karnataka, "State PPP Policy for Infrastructure Projects – 2025"
(53)2
4. The key objectives of the Karnataka "State PPP Policy for Infrastructure Projects – 2025"
includes the following:
4.1. To improve the quality and quantity of infrastructure by executing a comprehensive multi-
year infrastructure agenda.
4.2. To foster high growth and promote equity by recognizing and embracing the key role of
Public-Private Partnerships (PPP) in advancing infrastructure development.
4.3. To empower Government Agencies as catalysts and facilitators for harnessing the
transformative power of PPPs to drive sustainable socio-economic progress.
5. The salient features of the Karnataka "State PPP Policy for Infrastructure Projects – 2025"
includes the following:
5.1. Operational Guidelines for the implementation of PPP Projects are incorporated to provide a
clear understanding of the PPP project life cycle, process flow, and the activities to be carried
out during the entire project life cycle.
5.2. The PPP Policy shall govern infrastructure projects for all sectors & sub-sectors.
5.3. The Departments through their Internal PPP Cell, shall:
5.3.1. Develop an annual action plan for PPP projects.
5.3.2. Develop a strategy and prepare multi-year road map for individual sectors for
infrastructure development in the State.
5.3.3. Undertake training and capacity building programs for Department officers in their
respective sectors for developing and managing projects implemented on PPP mode.
5.3.4. Identify and prepare a comprehensive list of all existing assets which could be
examined for monetization or recycling.
5.3.5. Review the incentives that may be proposed for the project. All such incentives
applicable under sectoral policies, schemes, or guidelines have to be approved by the
concerned Department and the Finance Department.
5.4. To assist IDP&IWTD, the PPP Cell will setup a Public Private Partnership Appraisal
Committee (PPPAC) to make recommendations to review, approve, or disapprove project
proposals based on Value-for Money and other considerations.
5.4.1. The PPPAC will be chaired by the Director of the PPP Cell and shall comprise of
multi-disciplinary experts with relevant expertise, including technical, economic,
financial, and legal expertise relevant to the industry (sector / project proposal)
concerned.
5.4.2. The PPP Cell may procure or avail the services of experts / specialists from academia
and sector specific industries to the PPPAC, Performance Review Unit.
5.5. The Departments need to send the PPP proposals availing KVGF support to Finance
Department, GoK, for seeking approval through IDP&IWTD.
5.6. PPP proposals from all Departments involving land need to follow the due procedure of
seeking approval from the Finance Department, GoK, and Cabinet.
5.7. KSIIDC will set up a suitably designed information management system to seek information
and monitor progress regarding implementation of PPP projects. Departments / Government
Agencies shall update the progress of PPP projects in the information management system on
a quarterly basis and compile the aforesaid quarterly reports.3
5.8. The Government Agency or implementing authority may ensure availability of 90%
unencumbered land at the time of tender. However, this may be relaxed on a case-to-case basis
by SLSWA (State Level Single Window Agency) / SHLCC (State High Level Clearance
Committee).
5.9. IDP&IWTD will act as a nodal agency to the Government in the development of all
infrastructure projects in the State taken on PPP mode and Asset Monetization mode.
5.10. All PPP projects to be implemented in the State by various Departments, Government
Agencies and State Corporations will be sent to PPPAC through IDP&IWTD for vetting and
advise.
5.11. The Infrastructure Project may avail the applicable incentives from the respective sectoral
policies and other applicable policies adhering to the due approval process.
5.12. Roles and responsibilities of Internal PPP Cell of Administrative Departments, KKRDB PPP
Cell and District PPP Committees are defined in the revised policy. Roles and responsibilities
of KSIIDC (Karnataka State Industrial Infrastructure Corporation Ltd.) are also revised.
The proposal for a revised “State PPP Policy for Infrastructure Projects – 2025” for the State
of Karnataka has been examined and hence this order.
Government Order No. IDD / 30 /ITS/ 2021
Bengaluru dated: 24.02.2025
Under the circumstances explained in the preamble, the Government of Karnataka is pleased to
announce the Revised “State PPP Policy for Infrastructure Projects – 2025” as detailed in Annexure
– I to this order.
State PPP Policy for Infrastructure Projects – 2025 contains the following Schedules:
I. Evaluation of Risks & Risk Mitigation Measures
II. Institutional Roles & Responsibilities
III. Incentives for Project Development
IV. Applicable Sectors
V. Asset Monetization
VI. PPP Projects: Concept Note Template
VII. Timeline for Developing PPP Projects in the State
1. The detailed scope of services of the IDP&IWTD as nodal agency for PPP projects in the State
is stated in Schedule II (Institutional Roles and Responsibilities) of the “State PPP Policy for
Infrastructure Projects – 2025” at Annexure – I.
2. The detailed scope of services of the Administrative Department’s Internal PPP cell is stated
in Schedule II (Institutional Roles and Responsibilities) of the “State PPP Policy for
Infrastructure Projects – 2025” at Annexure – I.4
3. The Concession Period for PPP Projects shall be determined based on the project’s feasibility
and financial viability assessment. (In the past, it is observed that some of the PPP projects
where not attracting Private Sector Participants for Concession Period of 30 years. Hence for
such projects to make it financially viable, Concession Period shall be increased from 30 years
to 45 years.)
This order is issued in concurrence with the approval of Finance Department vide
endorsement no. FD 222 Exp-1/2024 dated 05.07.2024 and Cabinet approval no. C - 41/2025
dated 30.01.2025.
By order and in the name of the
Governor of Karnataka
(Shaila R. Gorwar)
Under Secretary to Government-1
Infrastructure Development Ports & Inland
Water Transport DepartmentState PPP Policy for Infrastructure Projects 2025
Government Order No: IDD 30 ITS 2025 Dt: 24.02.2025 (Annexure-1)
Government of Karnataka
State PPP Policy for
Infrastructure Projects – 2025
Infrastructure Development, Ports &
Inland Water Transport DepartmentState PPP Policy for Infrastructure Projects 2025
VISION
The Government of Karnataka envisions fostering strong Public Private Partnerships in
infrastructure to drive high growth and promote equity. By fostering private investments in
infrastructure, we seek to facilitate sustainable development and achieve socio-economic
progress for the people of Karnataka. By adhering to international best practices, we aspire to
establish Karnataka as a global role-model for infrastructure development, driving inclusive
growth and long-term prosperity for present and future generations.
MAIN OBJECTIVE
The PPP Policy for Infrastructure Projects, 2025 aims to improve the quality and quantity of
infrastructure in Karnataka by executing a comprehensive multi-year infrastructure agenda.
Rooted in our vision of fostering high growth and promoting equity, this policy recognizes
and embraces the key role of Public-Private Partnerships (PPP) in advancing infrastructure
development. With a focus on empowering government agencies as catalysts and facilitators,
we are committed to harnessing the transformative power of PPPs to drive sustainable socio-
economic progress across Karnataka.
TOUCHSTONE PRINCIPLES
A. Efficient use of assets and allocation of resources – Maximize asset utilization while
allocating resources effectively for optimal infrastructure outcomes
B. Fair payment for services – Ensure fair compensation mechanisms aligned with
service delivery and project performance that encourage participation
C. Equitable contractual structures – Establish contracts that uphold fairness and balance
between parties involved in PPP projects
D. Transparent procurement process – Conduct procurement openly and transparently to
foster trust, integrity, and accountability among stakeholders
E. Balanced regulatory frameworks – Develop regulations that strike a balance between
fostering innovation and safeguarding public interest
F. Enabling institutional framework – Establish institutional structures and mechanisms
to facilitate effective implementation and governance of PPP projects
G. Incentives for project development – Promote fiscal and non-fiscal incentives that that
encourage private sector participation aligned with long-term infrastructure
development goalsState PPP Policy for Infrastructure Projects 2025
Table of Contents
PART I. PREAMBLE ........................................................................................................7
PART II. OBJECTIVES & BENEFITS ..........................................................................10
PART III. APPLICABLE SECTORS ...............................................................................11
PART IV. TOUCHSTONE PRINCIPLES .......................................................................12
A. EFFICIENT USE OF ASSETS AND ALLOCATION OF RESOURCES ......... 12
B. FAIR PAYMENT FOR SERVICES ................................................................... 13
C. EQUITABLE CONTRACTUAL STRUCTURES ............................................. 14
D. TRANSPARENT PROCUREMENT PROCESS ............................................... 15
E. BALANCED REGULATORY FRAMEWORK ................................................ 18
F. ENABLING INSTITUTIONAL FRAMEWORK .............................................. 18
G. INCENTIVES FOR PROJECT DEVELOPMENT ............................................ 22
PART V. MONITORING AND EVALUATION OF POLICY ....................................23
PART VI. DURATION AND REVIEW OF POLICY ....................................................24
PART VII. SECTORAL STRATEGIES ............................................................................24
PART VIII. SPECIAL THRUST TO DEVELOPMENT OF INFRASTRUCTURE IN
KALYANA KARNATAKA REGION DEVELOPMENT BOARD,
KALABURAGI .................................................................................................25
PART IX. MODEL BID DOCUMENTS, POLICIES AND RULES FORMULATED
BY GOVERNMENT OF INDIA .....................................................................25
PART X. SCHEDULE.......................................................................................................26
A. SCHEDULE I – EVALUATION OF RISKS & RISK MITIGATION
MEASURES ....................................................................................................... 26
B. SCHEDULE II – INSTITUTIONAL ROLES & RESPONSIBILITIES ............. 30
C. SCHEDULE III – INCENTIVES FOR PROJECT DEVELOPMENT ............... 35
D. SCHEDULE IV – APPLICABLE SECTORS .................................................... 37
E. SCHEDULE V – ASSET MONETIZATION ..................................................... 41
F. SCHEDULE VI – PPP PROJECTS: CONCEPT NOTE TEMPLATE ............... 44
G. SCHEDULE VII – TIMELINE FOR DEVELOPING PPP PROJECTS IN THE
STATE ................................................................................................................ 48State PPP Policy for Infrastructure Projects 2025
ABBREVIATIONS
BLT Build-Lease-Transfer
BOLT Build-Own-Lease-Transfer
BOO Build-Own-Operate
BOOST Build-Own-Operate-Share-Transfer
BOOT Build-Own-Operate-Transfer
BOST Build-Operate-Share-Transfer
BOT Build-Operate-Transfer
BT Build & Transfer
CA Concession Agreement
DEA Department of Economic Affairs, Ministry of Finance, Government of
India
EPC Engineering Procurement Construction
FD Finance Department, Government of Karnataka
GDP Gross Domestic Product
GSDP Gross State Domestic Product
GoI Government of India
GoK Government of Karnataka
IDC Inter-Departmental Committee
IDP&IWTD Infrastructure Development, Ports & Inland Water Transport
Department, Government of Karnataka
IIF Infrastructure Initiative Fund
IIPDF India Infrastructure Project Development Fund
IT Information Technology
KIPDF Karnataka Infrastructure Project Development Fund
KSIIDC K arnataka State Industrial and Infrastructure Development Corporation
KTPP Act Karnataka Transparency in Public Procurements Act, 1999 (includes
amendments thereof)
KTPP Rules Karnataka Transparency in Public Procurement Rules, 2000 (includes
amendments thereof)
K-RIDE Rail Infrastructure Development Co. Karnataka Ltd.
KUIDFC Karnataka Urban Infrastructure Development &Finance Corporation
Ltd.
1State PPP Policy for Infrastructure Projects 2025
KVGF Karnataka Viability Gap Fund
LRTS Light Rail Transit Systems
MRTS Mass Rapid Transit Systems
MSW Municipal Solid Waste
NGO Non-Governmental Organization
JNNURM Jawaharlal Nehru National Urban Renewal Mission
O&M Operation & Maintenance
PDF Project Development Fund
PIF Project Investment Fund
PPP Public-Private Partnership
PSP Private Sector Participant
ROMT Rehabilitate-Operate-Maintain-Transfer
SHLCC State High-Level Clearance Committee
SLSWA State Level Single Window Agency
SPV Special Purpose Vehicle
VGF Viability Gap Fund
2State PPP Policy for Infrastructure Projects 2025
DEFINITIONS
Asset The assets of the public sector and Government Departments are
diverse and spread out across the state. These assets could be
categorized, broadly, into the following classes: a) Land and
Buildings; b) brown-field operational assets such as pipelines,
roads, mobile towers etc.
Asset Monetization Asset Monetization is a limited period license / lease of an asset
owned by a Department or Government Agency to a Private Sector
Participant for an upfront or periodic consideration or a
combination of both.
Bidder Any entity which has submitted a proposal to undertake an
Infrastructure Project under Public-Private Partnership
Central Government Government of India
Central Government Any Department of the Central Government, any statutory
Agency authority of the Central Government, or body corporate, owned or
controlled by the Central Government holding greater than 50% of
the paid-up share capital in such entity.
Company Any entity incorporated under the Companies Act 1956 / 2013
Concession Period Concession Period or Project Term means the duration of the
contract or concession agreement for the PPP project.
Department Departments in State Government
Developer Any Private Sector Participant who has entered a contract for
development of an Infrastructure Project with the Government /
Government Agency on PPP Basis
District PPP A committee constituted by Government at the District level to
Committee facilitate and co-ordinate infrastructure projects under the PPP
route.
Government Government of Karnataka
Government Agency Any Department of the Government, any statutory authority, local
body, or body corporate, owned or controlled by the Government
holding minimum 51% of the paid-up share capital in such entity.
3State PPP Policy for Infrastructure Projects 2025
India Infrastructure India Infrastructure Project Development Fund (IIPDF) Scheme is
Project Development administered by DEA, GoI for providing financial support to the
Fund Government Agency for onboarding quality advisory services for
better structuring of bankable and biddable PPP projects.
IIPDF supports Government Agency in sourcing funding to cover
PPP transaction costs, thereby reducing the impact of costs related
to procurement of TAs on their budgets.
Infrastructure The basic physical structures and facilities, such as buildings,
roads, power supplies, etc., needed for the operation of a society or
enterprise.
It includes all infrastructure sectors and sub-sectors as defined in
Schedule IV – APPLICABLE SECTORS of this document (i.e.,
“PPP Policy for Infrastructure Projects, 2025”) and any
amendments / additions made thereof.
Infrastructure Project A project in Infrastructure, in the sectors delineated in this Policy
Karnataka Karnataka Infrastructure Project Development Fund (KIPDF)
Infrastructure Project Scheme is administered by IDP&IWTD, GoK for providing
Development Fund financial support to the Government Agency for onboarding quality
advisory services for better structuring of bankable and biddable
PPP projects.
KIPDF supports Government Agency in sourcing funding to cover
PPP transaction costs, thereby reducing the impact of costs related
to procurement of TAs on their budgets.
Karnataka Viability Karnataka Viability Gap Funding (KVGF) or Grant means a grant,
Gap Funding one-time or deferred, provided under Government of Karnataka’s
VGF Scheme with the objective of making a project commercially
viable
Private Sector Means any Entity other than:
Participant a. Central Government or Central Government Agency
b. State Government or State Government Agency
c. Any joint ventures between Central Government, Central
Government Agencies, Government and/or Government
Agency, where there is no shareholding from private/ retail
investors.
Public Need Means a substantial or obvious community need for the proposed
project based on all attendant circumstances as compared to a mere
convenience. The determination of “Public Need” shall be taken by
the relevant Department after considering (a) Common use and
needs of the community; (b) Appropriateness of the project in
relation to the development plans of the Department; and (c)
Possibility of the project otherwise not coming up.
4State PPP Policy for Infrastructure Projects 2025
Public Private Public Private Partnership or “PPP” is a form of fixed-term
Partnership contractual arrangement between a public entity on one side and a
private entity on the other, for the provision of public assets and/or
public services through investments being made and/or
management being undertaken by the private entity, may or may
not require payment of fee by users, for a specified period of time,
where there is well defined allocation of risk between the private
entity and the public entity and the private entity’s performance is
contractually obligated to conform (or are benchmarked) to
specified and predetermined performance standards.
Public Private Public Private Partnership Appraisal Committee (PPPAC) is the
Partnership Committee constituted by Infrastructure Development, Ports and
Appraisal Committee Inland Water Transport Department (IDP&IWTD), Government of
(PPPAC) Karnataka in PPP Cell to make recommendations to review,
approve / disapprove PPP project proposals.
PPP Cell PPP Cell is the institutional arrangement established by
Infrastructure Development, Ports and Inland Water Transport
Department (IDP&IWTD), Government of Karnataka to manage
all activities related to policy, technical, legal and such other
matters pertaining to PPP projects.
Rehabilitate / Rehabilitate / Renovate refers to the process where PSP are given
Renovate the responsibilities to rehabilitate, or renovate, or restore or
upgrade, or improve an existing infrastructure asset. This involves
the restoration and modernization of the infrastructure to meet
current standards and demands and extend their lifespan. After
rehabilitation / renovation, the PSP typically operates the asset for a
specified concession period before transferring it back to the
government. Under PPP, rehabilitation / renovation projects
leverage private sector investment and expertise, while risks and
benefits are shared between public and private partners.
5State PPP Policy for Infrastructure Projects 2025
Revenue Revenue shall mean all amounts charged and recovered by the PSP
from the Users on mutually agreed terms and shall include user
charges for use of the infrastructure / service by the Users and shall
also include but not be limited to all charges, rent, license fees,
tariff, fee, compensation, benefits, deposits (whether long term or
short term and whether refundable or not), capital receipts,
insurance claims, or any other similar payment by whatever name
called, received by or paid to the PSP or receivable by the PSP or
payable to the PSP or due and realisable by the PSP, for or with
respect to use of the infrastructure / service. Further, the
Concession Agreement will outline the sources of revenue for the
project, including the methods for calculating and collecting.
Risk An uncertain event which, if it occurs, may cause actual project
outcomes to differ from expected outcomes.
State High Level State High Level Clearance Committee (SHLCC) is the Committee
Clearance Committee constituted by Government of Karnataka under Section 3 of the
(SHLCC) Karnataka Industries (Facilitation) Act 2002.
State Level Single State Level Single Window Agency (SLSWA) for PPP is the
Window Agency Agency constituted by Government of Karnataka at the State level
(SLSWA) for PPP for approval of PPP projects up to the limit as prescribed by
Government of Karnataka from time to time.
Transaction Advisors Consultants hired through a transparent system of procurement by
the Government Agency to assist them in designing the project
and/or providing technical, financial and legal input for the project
design, and providing advice for the management of the process of
procuring the Private Sector Participant for the PPP project. These
include Transaction Advisers selected from the panel of
Transaction Advisers announced by GoI (through Department of
Economic Affairs), GoK (through IDP&IWTD) and on nomination
basis from time to time.
Viability Gap Viability Gap Funding (VGF) or Grant means a grant, one-time or
Funding deferred, provided under Government of India’s VGF Scheme with
the objective of making a project commercially viable.
6State PPP Policy for Infrastructure Projects 2025
PART I. PREAMBLE
1. Karnataka is one of the most economically vibrant States and has demonstrated strong
growth over the years. As per the Economic Survey of Karnataka (2023-24),
Karnataka’s per-capita income of INR 3.32 Lakh is higher by 79% to all India per-
capita income of INR 1.85 Lakh during FY 2023-24 at current prices. Karnataka’s
Gross State Domestic Product (GSDP) at current prices for FY 2023-24 is INR 25.01
Lakh Crore, contributing to 8.4% of the national GDP. In FY 2023-24, the State has a
significant contribution from service sector, i.e., 67%, while industry and agriculture
sector contributions are 20% and 13% respectively1.
2. Infrastructure has been one of the key priority areas for India and the Central
Government has increased infrastructure spending at a rapid pace over the years.
However, the increase in India’s GDP in recent years has put tremendous pressure on
its infrastructure. There are parts of the country which remain isolated economically
as well as geographically and their immense potential remains untapped. The lack of
infrastructure not only results in reduced economic output, it also translates into
additional costs in terms of time, effort and money to access essential services such as
health care and education. Therefore, it is important that infrastructure development is
given prime consideration for economic welfare.
3. The World Bank (WB) and International Monetary Fund´s (IMF) economic forecasts
both make the case for increased infrastructure investment to support long-term
growth. India’s gross domestic product (GDP) grew by 8.2% in FY 2023-242, thereby
making it one of the world’s fastest-growing major economies. To support this long-
term growth, there is a stronger need to focus on the development of infrastructure
and raising resources to finance infrastructure requirements.
4. Infrastructure development has remained central to Karnataka’s efforts to deliver
inclusive and robust growth. Clearly recognising the need to develop high quality
infrastructure as a means to achieve rapid economic growth, the Government of
Karnataka (GoK) had come out with an Infrastructure Policy in 1997. The
Infrastructure Policy of 1997 was aimed at expanding and upgrading infrastructure to
meet the growing needs of the industrial and agricultural sectors, inviting private
investment in infrastructure, and adopting a co-ordinated and integrated approach to
infrastructure development. The policy also had specific incentives and concessions
for infrastructure projects. However, with the efflux of time, there have been changes
in the tax and stamp duty regime, formulation of Government of India’s (GoI) policy
of Public-Private-Partnership (PPP) in infrastructure projects, and the concept of the
Viability Gap Fund (VGF). In line with these changes, the State Government resolved
to formulate the Infrastructure Policy of 2007 which was further amended in October
2015 and again in March 2018 to keep pace with new development. To ensure the
1 Source: Economic Survey of Karnataka, 2023-24
2 Source: Economic Survey of India 2023-24
7State PPP Policy for Infrastructure Projects 2025
policy is refreshed and aligned with the latest domestic and global trends in the
infrastructure sector, an updated PPP Policy for Infrastructure Projects is being
released in 2025.
5. Karnataka has seen many successes in PPP Infrastructure projects over the years. One
notable example is the Kempegowda International Airport (KIA) in Bengaluru which
is the 3rd busiest airport in India. KIA was conceived and developed as a green field
international airport on PPP format, and became operational in May 2008. It is one of
the largest airports in India built with modern technology and is ranked among the top
in terms of quality of service and user experience. The State Government has 13%
equity shareholding in Bangalore International Airport Limited.
6. As Karnataka grows and takes its rightful place in the national and global economy,
the Government’s focus has remained on sound policies and inclusive institutions.
This is where the Karnataka’s strong economic frameworks come in to make the
State’s economy more resilient and ever more supportive of growth. Today,
Karnataka has more than 20 policies across multiple high-potential sectors such as
Aerospace and Defence, Biotechnology, Engineering R&D, IT, IT-enabled services,
Innovation, Textiles, Agri-Business and Food Processing, Start-up, Tourism,
Animation Visual Effects Gaming, Semi-conductor, Renewable Energy, Solar,
Infrastructure, Road, Port, Grape Processing and Wine, Pharmaceutical, NRI, etc.,
that improve productivity and wages, employment opportunities and outcomes.
7. The Government of Karnataka’s Industrial Policy 2020-25 envisions building a
prosperous Karnataka through inclusive, sustainable & balanced industrial
development and lays emphasis on providing good infrastructure support for
promotion of industries.
8. The Government of Karnataka has also been a fast mover in providing appropriate
policy push to adopt new technologies. For example, the Startup Policy 2022-2027
builds on the previous status policies of the State and aims at stimulating the growth
of 10,000 new startups over the next 5 years, nurturing them throughout their business
lifecycle while making Karnataka a global innovation hub. Similarly, the Engineering
R&D Policy 2021, the first of its kind in India, prioritised aerospace & defence; auto,
auto components & EV; biotechnology, pharma and medical devices; semiconductors,
telecom, ESDM; and software products to attract leading entities to establish and
expand in Karnataka. Karnataka was the first southern state to launch a renewable
energy policy in 2009 and the Renewable Energy Policy 2022-2027 aims to continue
the policy’s success to deepen the renewable energy markets in the State and make
Karnataka an attractive destination for the sector’s investors.
9. These policies have been evolved with a view to augment and expedite infrastructure
development through active private sector participation. Promotion of private
investment has been high on the agenda of Government of Karnataka. However,
8State PPP Policy for Infrastructure Projects 2025
infrastructure challenges remain large and require public investment to encourage
private investment to supplement.
10. The Government has sought to deal with some of these constraints by implementing
various programmes and projects departmentally and through Government Agencies.
These are being financed through various sources including budgetary resources,
grants and loans from GoI, and bilateral and multi-lateral agencies.
11. Karnataka has embarked upon an infrastructure led development strategy. The
Government recognises the experience from several emerging markets and
developing economies that the bottlenecks and gaps in critical infrastructure could
hinder the potential rate of growth of the economy. These targets are expected to be
achieved by facilitating private sector investment and rapidly upgrading technology.
The Government of Karnataka recognises that high levels of economic and industrial
growth and job creation can be achieved only if infrastructure develops at a
commensurate pace. The Government also recognizes that the private sector can play
a substantial role in infrastructure development and that given the right policies and
frameworks, adequate private investment can become available. The State
Government has already taken several initiatives in this regard, envisaging significant
investments in projects in transportation (for airports, ports, railways and roads),
tourism, power generation, urban infrastructure, etc., which leads to the direct and
indirect job creation related to infrastructure.
9State PPP Policy for Infrastructure Projects 2025
PART II. OBJECTIVES & BENEFITS
12. PPP Policy for Infrastructure Projects, 2025 envisages increasing the quality and
quantity of infrastructure through the implementation of a multi-year infrastructure
Action Plan. The policy focus is on recognizing and embracing the key role of Public
Private Partnerships (PPP) in enhancing infrastructure development. The impact of
infrastructure on an economy depends greatly on the policy environment within which
the investment is made. The need for infrastructure development is so enormous that
all efforts need to be made to maximize the limited public sector resources through
PPPs in the development and functionality of infrastructure.
13. The Government of Karnataka therefore proposes to provide and facilitate an
increasing role for PPP - both in creating new infrastructure assets, as well as in
managing assets already created. By this, the Government seeks to derive the
following benefits, which would deliver better value to the user:
a) Savings in costs due to innovative designs, timely project implementation and
higher efficiencies in operations
b) Enhanced quality of services to users due to better managerial practices &
efficiencies
c) Reduction in, and gradual elimination of, pricing constraints
d) Enabling public funds to be earmarked for other commercially non-viable but
socially justifiable projects
e) Financial innovation and development of cost-effective solutions
f) Greater employment opportunities in the infrastructure sector
g) Achievement of Sustainable Development Goals (SDG)
14. PPP would be considered both in new Infrastructure Projects and in managing
existing Infrastructure Projects. The specific option to be pursed would be based on
the specific requirements of the project, for which the Government may seek
recommendations from experts / professional agencies. Where necessary, the
Government may also set up independent advisory group(s) to assist in the
formulation of sector strategies and selection of suitable implementation options.
15. As far as possible, for all new investments in infrastructure, the option of
implementing the project through PPP would be explored. Exceptions would be made
with regard to projects in backward areas, or projects with high social relevance, but
which are prima-facie not financially viable. The following models would be
considered, inter-alia, for PPP:
a) Project Implementation by a private developer / operator or joint ventures with
Government under a licence / concession structure.
b) Project implementation by a Special Purpose Vehicle (SPV) set up by
Government / Government Agency followed by divestiture to a private operator
after stabilization of operations.
10State PPP Policy for Infrastructure Projects 2025
c) Project implementation by Government / Government Agency followed by a
medium or long-tenure O&M contract to a private operator.
16. Government recognizes that for some projects it may be necessary for Government of
India or Government of Karnataka to extend financial support by way of equity
participation, Viability Gap Fund3, or other mechanisms in order to leverage the
desired levels of private finance. It is envisaged that the incentives / financial support
contemplated under this Policy are applicable:
a) For infrastructure projects where, in the opinion of the Government, the project is
a public service delivery project set up for common use, where such infrastructure
would otherwise not be created; and
b) Only for bridging the viability gap for Infrastructure Projects on a PPP basis.
17. Given the experiences with the reform process in the last decade, it is felt that a
consistent approach needs to be followed in all infrastructure sectors, so that the
process of development is both uniform and complementary. The PPP Policy for
Infrastructure Projects 2025 seeks to formulate the touchstone principles that would
constitute the broad framework for the development of all infrastructure sectors in the
State. Operational Guidelines shall be issued to further elaborate on undertaking PPP
projects in all infrastructure sectors in the State.
18. In order to achieve this consistency, Government would develop multi-year Action
Plans detailing the strategies and implementation plans for each of the infrastructure
sectors clearly setting out the role for PPP, which would allow for the provision of
adequate and reliable infrastructure services of high quality at affordable prices to
users.
PART III. APPLICABLE SECTORS
19. This Policy shall govern infrastructure projects for all the sectors & sub-sectors. In all
cases, it is envisaged that the incentives / financial support contemplated under this
Policy are applicable only if the conditions under Para 16 are met. The sectors / areas
under the ambit of the Policy are set out in Schedule IV would be updated as and
when appropriate. The Departments through their Internal PPP Cell shall develop
annual action plan for PPP projects and the list of PPP projects shall be reviewed by
SLSWA for PPP. The Departments through their Internal PPP Cell shall undertake
training and capacity building programs for the Department officers in their respective
sectors for developing and managing projects implemented on PPP mode.
3 As per Guidelines on Support to Public Private Partnerships in Infrastructure issued by the Ministry of Finance, Department of Economic
Affairs, Government of India and Government of Karnataka.
11State PPP Policy for Infrastructure Projects 2025
PART IV. TOUCHSTONE PRINCIPLES
20. The PPP Policy for Infrastructure Projects has been developed around the following
main principles:
a) Efficient use of assets and allocation of resources
b) Fair payment for services
c) Equitable contractual structures
d) Transparent procurement process
e) Balanced regulatory framework
f) Enabling institutional framework
g) Incentives for project development
A. EFFICIENT USE OF ASSETS AND ALLOCATION OF RESOURCES
21. Government recognises that efficiency in allocation of resources can be achieved by
prioritisation of projects in an objective and unbiased manner. To this end,
Government would first look at the option of better utilization of existing assets
before new investments are proposed. Priority would be accorded to those projects
where development of critical linkages provide significant network or linkage
benefits, as in the case of a transportation link interfacing railways, roads and ports, or
a power project in the vicinity of a consumption centre.
22. Government would develop projects based on consideration of both social need and
economic viability, the focus being integrated infrastructure development.
Government, however, recognises that “social” projects may not offer sufficient
commercial incentive for PPP. In such cases, Government would use other
compensation mechanisms like provision of VGF, or annuity payments. As an
alternative, Government (or Government Agency) may implement such projects
upfront and eventually transfer management of services to a Private Sector Participant
(PSP), where feasible.
23. Government would also develop objective criteria for rationalization of investments
for expanding, upgrading and/or development of infrastructure by adhering to the
policies in the State.
24. Since Government would actively promote PPP in infrastructure projects, a larger
share of investable public funds could be used for identified social needs that may not
otherwise be amenable to private finance initiatives. In order to create a sustainable
source of Government funds for long-term infrastructure financing, Government
would leverage internal and extra-budgetary resources under various schemes from
the Central Government, State Government, and assistance from bilateral and
multilateral agencies.
Based on infrastructure need and funding requirements, Departments / Government
Agencies would identify existing assets within their jurisdiction which can be made
12State PPP Policy for Infrastructure Projects 2025
available for monetization. Asset Monetization involves the creation of new sources
of revenue by unlocking the value of hitherto unutilized or underutilized public assets.
Individual Departments through their Internal PPP Cell shall identify and prepare a
comprehensive list of all existing assets which could be examined for monetization or
recycling. To ensure generation of funds through Asset Monetization, it is important
that the identified assets are revenue generating assets or potential revenue generating
assets.
• In case of Revenue generating assets, the future revenue can be monetized to
generate the funds, until and unless the asset is a land parcel kept for recycling.
• Potential revenue generating assets means it is an inefficient asset which is
identified for recycling so that monetization can bring private efficiency and
modern technology; and funds can be generated to invest in future infrastructure
requirements.
B. FAIR PAYMENT FOR SERVICES
25. Government recognizes that in a system where pricing of services is not economically
sustainable, users would have no incentive to economise on their use of resources, and
service providers would have no incentive to become more efficient. Government
believes that the inculcation of the “provider-charges” and the “user-pays” principles
are fundamental to the success of PPPs. To this end, Government would, where
necessary and appropriate, consider levy of user charges (tolls, fees, tariffs, cesses,
etc.) to meet the following objectives:
a) Create a stable and dedicated financial source for construction / redevelopment /
rehabilitation / replacement of project assets and their ongoing operations and
maintenance in order to provide efficient, sustainable and high-quality services at
affordable prices to users.
b) Manage demand
c) Encourage PPP
d) Cover costs of service provision
e) Recognise that economically weaker sections may require certain subsidies in user
charges and provide explicitly for such subsidies to the project to ensure that the
project remains economically viable.
26. The levy of user charges would be based on one or more of the following criteria:
a) Savings to users
b) Willingness to Pay
c) Need for explicit subsidies
d) Uniformity between various projects
e) Cost Recovery
f) Debt service & Equity returns
13State PPP Policy for Infrastructure Projects 2025
C. EQUITABLE CONTRACTUAL STRUCTURES
27. Government would set in place appropriate contractual arrangements to give effect to
the process of project implementation. Government’s endeavour would be to develop
contractual frameworks that would allow for equitable allocation of risks between the
contracting parties, taking into account the legitimate concerns of private investors.
The attempt would be to allocate risks to the party best suited to bear the risks. A
matrix of typical project risks and risk mitigation measures is set out in Schedule I.
28. EXISTING ASSETS: The contractual / implementation structures used would
include the following:
a) Management of the whole or part of the assets by private operators through
i. Operations, Maintenance and Transfer contracts;
ii. Lease of assets / Area Concession;
iii. Rehabilitate / Renovate, Operate, Maintain and Transfer (ROMT) contracts.
b) Sale of whole or part of the assets
c) Partial or full divestiture of the Undertaking
d) Direct contractual approach (large upfront payment coupled with small annual
payments or small upfront payment coupled with large annual payments)
e) Structured finance approach through securitization of public assets such as
INVITS, REITS, etc.
29. NEW ASSETS: Depending on the nature of the project, the contractual structures /
agreements used for new projects would include, inter-alia:
a) Build & Transfer (BT)
b) Build-Lease-Transfer (BLT) / Build-Own-Lease-Transfer (BOLT)
c) Build-Transfer-Lease (BTL)
d) Build-Transfer-Operate (BTO)
e) Build-Operate-Transfer (BOT) / Design-Build-Operate-Transfer (DBFOT)
f) Build-Own-Operate-Transfer (BOOT) / Design-Build-Own-Operate-Transfer
(DBOOT)
g) Build-Operate-Transfer (BOT) / Design-Build-Operate-Transfer (DBOT)
h) Build-Finance-Operate-Transfer (BFOT) / Design-Build-Finance-Operate-
Transfer (DBFOT)
i) Build-Own-Operate (BOO)
j) Build-Operate-Share-Transfer (BOST)
k) Build-Own-Operate-Share-Transfer (BOOST)
l) Build-Own-Lease-Transfer (BOLT)
m) Hybrid Annuity Model (HAM)
Even the listed contractual structures, can be further categorized based on the project
requirements. For example, In the case of BOT model, it can be again categorised into
few types based on the payment received by the Private Sector Participant:
a) BOT: Users pay for the services provided
14State PPP Policy for Infrastructure Projects 2025
b) BOT: VGF support is provided by the Government and Users pay for the services
provided
c) BOT: Government pays for the services provided, i.e., Annuity
d) BOT: VGF support is provided by the Government and in addition, Government
pays for the services provided, i.e., HAM
Similarly, various models of PPP could be structured based on the project
requirments.
30. SPECIAL PURPOSE VEHICLES: Where appropriate, Government/ Government
Agencies may participate in the equity structure of any SPV for the development and
implementation of infrastructure projects. The selection of the PSP for participating in
the SPV would follow the procurement process set out in para 32. The equity
structure of the SPV would be decided on a case-to-case basis.
31. Government recognizes that creation of infrastructure under the PPP model requires
that there be reasonable assurance that competing facilities would not be created that
would materially adversely affect the technical and financial viability of the project.
D. TRANSPARENT PROCUREMENT PROCESS
32. All contracts would be awarded on the basis of a fair and transparent procurement
process, under the ambit of the Karnataka Transparency in Public Procurement Act
(Act 29 of 2000), or under a “Swiss Challenge” format as set out in para 34. In all
cases, the award criteria would be spelt out upfront. The stages in the procurement
process could be single-stage or multi-stage, depending on the size or level of
complexity of the project. For this purpose, Government may use the services of
Empanelled Consultants / advisers empanelled by State or Central Government.
Generally, the stages in the procurement process would include:
a) Expressions of interest (EOI)
b) Request for Qualifications (RFQ)
c) Request for Proposals (RFP)
d) Technical and financial evaluation
e) Signing of Agreements
33. The criteria used for selection would inter-alia include objective technical and for
financial parameters, such as:
a) Level of service, quality of assets offered;
b) Lowest present value of Viability Grant support;
c) Lowest quantum of land;
d) Lowest present value of asset based support from the Government;
e) Highest share (or present value of) of revenue;
f) Lowest unit value or present value of payments by Government;
g) Highest upfront payment (or present value of upfront payments);
h) Highest present value of future payments;
15State PPP Policy for Infrastructure Projects 2025
i) Lowest concession period;
j) Lowest unit value or present value of user fees;
k) Highest premium on (or present value of) equity shares offered.
l) Reverse Auction
34. Swiss challenge or Suo-moto proposals to promote innovative projects by
maximising competition & transparency4: A Private Sector Participant (Proposal
Initiator) may submit a suo-moto and innovative proposal (Original Proposal) to
Government / Government Agency for setting up an Infrastructure Project containing
the following:
a) Articulation of the public need for the project;
b) Requisite technical details, i.e., details of alignment / site, estimates of cost, etc.;
c) Cost incurred by the Proposal Initiator for the development studies related to the
project.
i. In respect of Suo-moto and innovative proposals:
1. Only such proposal that has innovation in technology, that is unique and
legally owned or authorised to be used by the Proposal Initiator that could
result in increased value addition; it may refer to incremental, emergent or
revolutionary changes in products, services and/or process. The proposal
should not only be suo-moto but also innovative.
2. Only such of the projects which do not require any financial support from the
Government, shall be considered.
3. Such of projects which would result in monopoly and exclusive rights shall
not be considered.
4. The requirement of land, if any, for the project would be considered for
acquisition / allotment at the market rates / KIADB allotment rates wherever
required. Under no circumstances, no land will be made available at
concessional rates.
5. The following sectors are considered with the threshold limits of the project
costs as indicated hereunder. The guidelines for procurement of PPP projects
through Swiss Challenge Route is issued separately. These, however, may
change from time to time.
No. Infrastructure Sectors Threshold Limits
1. Agri-infrastructure Projects costing Rs. 25 crore and above.
2. Education Projects costing Rs. 25 crore and above.
3. Energy Projects costing Rs. 50 crore and above.
4. Healthcare Projects costing Rs. 50 crore and above.
4Vide Government Order No. IDD 07 ITS 2013 dated 30.10.2015.
16State PPP Policy for Infrastructure Projects 2025
No. Infrastructure Sectors Threshold Limits
5. Industrial Infrastructure Projects costing Rs. 100 crore and above.
6. Irrigation Projects costing Rs. 500 crore and above for
major irrigation projects; and
Projects costing Rs. 200 crore and above for
minor irrigation projects.
7. Public Markets Projects costing Rs. 25 crore and above.
8. Tourism Projects costing Rs. 50 crore and above.
9. Transportation and Projects costing Rs. 500 crore and above.
Logistics
10. Urban and Municipal Projects costing Rs. 50 crore and above.
Infrastructure
11. Sports and Youth Projects costing Rs. 50 crore and above.
Services
12. Housing Projects costing Rs. 50 crore and above.
13. Rural Development Projects costing Rs. 25 crore and above.
14. Tele-communications Projects costing Rs. 100 crore and above.
6. No VGF assistance would be available.
7. A maximum of 4 months5 shall be made available to the project proponent
from the day of clearance by the SLSWA for PPP to submit final proposals
along with DPR / PFR / Feasibility report to enable to go ahead inviting
competitive bidding for counter proposals.
ii. Government would, in the first instance, assess the public need for the
Infrastructure Project. In case the Infrastructure Project is found to satisfy a public
need, Government would assess the technical feasibility/ suitability of the Original
Proposal and modify the same, if required. Government may carry out additional
studies for the project, if required.
iii. After evaluating the proposal and considering it suitable, Government would, put
up competitive bidding for counter proposals (“Swiss Challenge”). The Original
Proposal (except proprietary information and details of the financial proposal) and
contract principles of the Original Proposal would be made available to any
interested applicants. If the competitive bidding process results in a superior
proposal, the Proposal Initiator would be given an opportunity to match the
competing counter proposal within a stipulated time-frame, and be selected as the
project concessionaire only if he is within 15% of the superior bid value. If the
Proposal Initiator declines to match the superior counter proposal, then the
applicant who has made the superior proposal would be selected as the
5Revised to 4 months vide corrigendum order No. IDD 59 ITS 2009 dated 16.08.2010.
17State PPP Policy for Infrastructure Projects 2025
concessionaire. Upon such selection, Government/ Government Agency
concerned shall cause/ arrange to reimburse to the Proposal Initiator, a part or the
whole of the project development costs, as determined upfront and declared in the
bidding documents, and may recover the same from the successful bidder. In order
to encourage competition in the bidding process, the superior bidder, in the event
the project is not offered to him would be reimbursed/ compensated to an extent
an amount not exceeding 0.10% of the cost of the project, or Rs. 20.00 lakhs,
whichever is less.
35. Government would evaluate all proposals received for any Infrastructure Project.
Government may also choose to appoint suitable external advisors or consultants,
where necessary, for the purposes of evaluation.
36. In order to facilitate expeditious project implementation, Government would
endeavour to conclude the evaluation process for all Infrastructure Projects within 90
days from the date of submission of the final proposals. In the case of suo-moto
proposals, Government would decide to proceed with the bidding process within 180
days of their submission. In any event, Government would endeavour to provide all
necessary State-level clearances and enable implementation of any Infrastructure
Project being taken up through Public Private Partnerships within 180 days from the
date of submission of the final proposals for such project.
E. BALANCED REGULATORY FRAMEWORK
37. Given that availability of unencumbered land in a time-bound manner is a critical pre-
requisite for most Infrastructure Projects, Government intends to set in place suitable
mechanisms, for facilitating expeditious acquisition of land for such projects. If found
necessary, Government would also consider promulgating a specific legislation for
expeditious acquisition of land for infrastructure projects covered under this Policy.
38. Since many infrastructure facilities and services have natural monopoly
characteristics, independent regulation may be desirable to ensure that the interests of
both users and service providers are kept in view.
39. Government intends to set up independent regulatory authorities6 for some of the
infrastructure sectors. The role of the regulator would include setting norms for entry
and exit, tariff fixation, and establishing standards for construction, operations and
maintenance for the facilities/services. However, the setting up the regulatory
authorities would be decided based on the specifics of each sector.
F. ENABLING INSTITUTIONAL FRAMEWORK
40. At present the process of project identification and development is handled by the
various Departments and Government Agencies and in case of urban projects by the
respective urban local bodies. The Infrastructure Development Ports & Inland Water
6Also multi-utility regulators
18State PPP Policy for Infrastructure Projects 2025
Transport Department (IDP&IWTD), Government of Karnataka, which has been set
up as the nodal agency to streamline the process of appraisal and approval of
Infrastructure Projects, shall facilitate various Departments in developing
Infrastructure Projects through PPPs.
41. Infrastructure Development Ports & Inland Water Transport Department through the
“PPP Cell” would manage all activities related to policy, technical, legal and such
other matters related to PPP projects. The PPP Cell is headed by the Director, PPP
Cell.
42. IDP&IWTD would be duly strengthened with staff having appropriate skills to enable
it to co-ordinate and integrate the necessary procedures and processes for facilitating
Government/Government Agencies in expeditious project approval and
implementation. Experts in domain areas such as PPP, finance, legal, procurement,
urban, rural, engineering, etc., would be hired by IDP&IWTD either directly or
through an agency to work exclusively for infrastructure projects and assigned within
respective Departments for seamless reporting and co-ordination with Departments.
Simultaneously, capacity would also be built up in Government/Government
Agencies at the State and District level, to formulate and implement Infrastructure
Projects on PPP basis. Services of empanelled consultants / Transaction Advisors may
be hired by the respective Departments/Government Agencies for structuring of PPP
projects and submit to IDP&IWTD for approval.
43. The PPP Cell may also engage consultants as and when necessary. The PPP Cell will
be the nodal agency to receive the proposals in respect of the PPP projects and place
them before the State Level Single Window Agency for PPP projects for
consideration and approval. The PPP Cell may invite/co-opt representatives from the
private sector, nominated by State - level Industrial fora such as ASSOCHAM, CII,
FKCCI, KASSIA, IWPA and ISA et.al.
44. Government will set up a District PPP Committees at the District level, to co-ordinate
and facilitate the implementation of infrastructure projects, including facilitation for
obtaining clearances and approvals on a PPP route. The District PPP Committee shall
be chaired by the Deputy Commissioner of the concerned district. The District PPP
Committee shall have officers of appropriate rank, nominated by the Government, as
well as up to three representatives from the private sector, nominated by State - level
Industrial fora such as ASSOCHAM, CII, FKCCI, KASSIA, IWPA and ISA et.al.
45. PPP Cell will act as a nodal agency to assist the Government in the development of
PPP policies and programme, review and monitor PPP projects during
implementation, execution and management and make suitable recommendations to
the Government for its consideration and adoption. To assist IDP&IWTD, PPP Cell
would also setup a Public Private Partnership Appraisal Committee (PPPAC) to make
recommendations to review, approve / disapprove project proposals on the basis of
Value-for Money and other considerations. PPPAC will be under the chairpersonship
19State PPP Policy for Infrastructure Projects 2025
of Director, PPP Cell and shall comprise of multi-disciplinary Experts with relevant
expertise like technical, economic, financial, and legal expertise relevant to the
industry (sector / project proposal) concerned. PPP Cell may procure / avail the
services of experts / specialists from academia and sector specific industries to the
PPPAC, Performance Review Unit. Financial Support under the Karnataka Viability
Gap Fund (KVGF) Scheme and recommendations for such allocation of the Fund for
Projects would be placed by the PPP Cell for IDP&IWTD’s approval. Further, KVGF
for the project would be finalised in concurrence with Finance Department, GoK.
46. KSIIDC, if so directed by IDP&IWTD, would also assist the respective Departments
in the project development and procurement process, where such assistance is
requested. Alternatively, these services could be procured from Empanelled
Consultants by State or Central Government as suitably identified and selected by the
Departments concerned and accordingly the proposal could be sent to the KSIIDC to
be placed for approval by IDP&IWTD.
47. A State Level Single Window Agency (SLSWA) for PPP has been set up at the State
Level under the Chairpersonship of the Chief Secretary to approve the projects under
PPP projects up to INR 500 Crore, and to recommend the projects above INR 500
Crore to the State High Level Clearance Committee (SHLCC) under the
Chairpersonship of the Hon’ble Chief Minister constituted under Section (3) of the
Karnataka Industries (Facilitation) Act 2002. In the case of all PPP proposals up to
INR 500 Crore, the concerned Department shall, in consultation with the IDP&IWTD
place them before the SLSWA for PPP for approval. For all proposals in excess of
INR 500 Crore, the SLSWA for PPP will scrutinize the proposals and make its
recommendations to the SHLCC for approval. The IDP&IWTD, as the nodal
Department for PPP, will assist the concerned Departments in the evaluation of all
such projects. The IDP&IWTD shall also assist the SLSWA for PPP and SHLCC in
evaluating and deciding upon the specific proposals.
48. The concerned Departments need to send the PPP proposals availing KVGF support
to Finance Department, GoK for seeking approval through IDP&IWTD. In addition,
PPP proposals from all Departments involving land7 need to follow the due procedure
of seeking approval from Finance Department, GoK and Cabinet.
49. POST AWARD GOVERNANCE AND PROJECT MONITORING8:
i. It is essential to continuously monitor the performance of the PPP projects over
the project life cycle in accordance with the Planning Commission guidelines on
“Institutional Mechanism for monitoring of PPP projects” issued vide OM
No.14011/09/2008-Infra (Part-II) dated 08.08.2012 of Department of Economic
Affairs, Government of India.
ii. The institutional structure for monitoring PPP projects requires the creation of a
7 Land utilization or land monetization or concession provided or transfer of rights or similar process.
8Vide Government Order No. IDD 07 ITS 2013 dated 30.10.2015.
20State PPP Policy for Infrastructure Projects 2025
two-tier mechanism for monitoring PPP projects. The PPP Cells within each
Department will have a Project Monitoring Unit (PMU) which monitors the
projects through a reporting mechanism. The Monitoring Reports for each project
would include compliance of contract terms, adherence to timelines, assessment
of performance, remedial measures and imposition of penalties. The State Level
Performance Review Unit (PRU) set up under PPP Cell would review the PPP
Project Monitoring Reports submitted by the different PMUs and oversee or
initiate action for rectifying any defaults or lapses.
iii. KSIIDC will set up a suitably designed information management system to seek
information and monitor progress regarding implementation of PPP projects.
Departments / Government Agencies shall update the progress of PPP projects in
information management system on quarterly basis and compile the aforesaid
quarterly reports.
50. IDP&IWTD would set out the process for scrutinizing and clearing all investment
proposals, frame guidelines for assessing the feasibility of private investment, set in
place standard procurement documents and framework agreements, and assist the
Government/Government Agencies in the procurement of developers. IDP&IWTD
would also facilitate the Government/Government Agencies, to develop and
implement Infrastructure Projects in the PPP format, in an expeditious manner.
51. In order to facilitate financing of project development and implementation in an
efficient, sustainable and expeditious manner, Government would use “Infrastructure
Initiative Fund”, “Indian Infrastructure Project Development Fund” (IIPDF) and
“National Investment and Infrastructure Fund” (NIIF) along with its “Karnataka
Infrastructure Project Development Fund” (KIPDF). IDP&IWTD would set out the
policy and regulatory guidelines and provide the necessary institutional support for
operation and management of the Fund. All fees and charges9 accruing from project
development and investment initiatives of IDP&IWTD/ concerned Government/
Government Agency, would be credited to the Infrastructure Initiative Fund.
Government would also make contributions to the Fund through budgetary provisions
and/or other sources, from time to time, as it may deem appropriate.
52. Each Department shall nominate a nodal officer for PPP. The nodal officer (he/she)
will be trained with the help of PPP Cell in IDP&IWTD and equipped with the
necessary knowledge to coordinate and facilitate such matters pertaining to PPP in
their respective Departments. In addition, individual Departments through their
Internal PPP Cell shall develop strategy and prepare road map for individual sectors
for infrastructure development in the State that will:
a) Identify critical projects in different sectors that need immediate attention;
b) Identify projects where significant benefits of network extension can be exploited
for integrated infrastructure development;
9 Such as project development fees, application/tender charges, concession payment, interest charges guarantee payments, taxes, cess, etc.
21State PPP Policy for Infrastructure Projects 2025
c) Explore the scope for PPPs in developing new Infrastructure Projects and
augmenting existing infrastructure facilities and encourage such participation
through appropriate incentives;
d) Prepare a shelf of projects for posing on a PPP format;
e) Mobilize resources through appropriate policy measures to supplement private
sector investment, especially in the case of commercially non-viable projects;
f) Identify and resolve bottlenecks in the institutional framework that are likely to
impede investments and therefore provide a conducive environment for
infrastructure development through PSP;
g) Facilitate the conversion of approved projects into the implementation phase.
53. The institutional roles and responsibilities are set out in Schedule II.
54. Government also recognizes the role of public opinion and stakeholder participation
in facilitating Infrastructure Project development and implementation. Since the
viability of projects is contingent upon cost to the final user, it is important to
ascertain “what the market can bear”. Mobilizing public opinion and ensuring
stakeholder participation is thus an integral part of Infrastructure Projects.
IDP&IWTD would collaborate with professional bodies, NGOs, Industry
Associations, and User Groups in facilitating this process.
G. INCENTIVES FOR PROJECT DEVELOPMENT
55. Government may consider providing incentives such as subsidies, concessions,
financial assistance, etc., set out in Schedule III to promote private finance initiatives
in infrastructure development. These would be available to all projects falling in the
ambit of Para 19 of this Policy. Investors would be eligible for any other additional
incentives proposed/available for projects under existing sectoral policies/proposed
sector-specific strategies, but Government shall take a holistic view of the totality of
incentives, vis-à-vis the viability requirements of the project. In addition, several of
these projects would also enjoy tax benefits under the Income Tax Act, 1961, as
delineated by the Government of India.
56. In case of projects where no private investments in the form of private equity
participation are envisaged, and where the Government Agency or implementing
authority directly awards the project to a contractor following a standard procurement
process, but not under a specific concession structure as described in Para 28-30 of
this document, no incentives would be available under this Policy.
57. Incentives such as subsidies, VGF in the infrastructure sector would be based on the
need for balancing adequate cost recovery, with social needs and regional
development. Wherever incentive is necessitated for social / regional needs, it shall be
the endeavour of the Government to ensure that such incentives are direct and
transparent. In all other cases, it shall be the endeavour to price services to be
commensurate with the real costs of service provision, and sustainability of the
22State PPP Policy for Infrastructure Projects 2025
project. Department and their Internal PPP Cell shall review the incentives that may
be proposed for the project. All such incentives applicable under sectoral policies /
schemes / guidelines have to be approved by the concerned Department and the
Finance Department.
58. To the extent that the project parameters may permit, every project shall endeavour to
maximise employment opportunities to the local population of the State of Karnataka.
PART V. MONITORING AND EVALUATION OF POLICY
59. The PPP Policy for Infrastructure Projects, 2025, will be translated into a
comprehensive Plan of Action where the State Government through the concerned
Department and their Internal PPP Cell would develop multi-year Action Plans
detailing the strategies and implementation plans for each of the infrastructure sectors.
60. A Coordination Committee is constituted by the Government, under the
Chairpersonship of Additional Chief Secretary / Principal Secretary / Secretary,
IDP&IWTD to facilitate coordination and planning from various Departments and
thereby make recommendations to State High Level Clearance Committee regarding
the development of policies, directives, manuals and guidelines in a timely manner for
taking interim course corrections.
61. The monitoring and evaluation of the policy would be done at the State level by the
State High Level Clearance Committee under the Chairpersonship of Hon’ble Chief
Minister.
62. Evaluation takes place at different instants while generally mid-way through the
policy cycle or programme implementation at the end. The output of an evaluation
can be used as the basis for new policy initiatives. The Evaluation of the PPP Policy
for Infrastructure Projects 2025, will be carried out through neutral and credible
agencies once every three years and the results will be placed before the State High
Level Clearance Committee. The programmes and interventions will be tweaked and
redesigned on the basis of these results and as per evolving infrastructure needs in the
State.
23State PPP Policy for Infrastructure Projects 2025
PART VI. DURATION AND REVIEW OF POLICY
63. This policy would come into force with effect from the date of issue of Government
notification and would be effective till the formulation of a new PPP Policy for
Infrastructure Projects.
64. There would be an interim review of this Policy every three years based on a critical
assessment of feedback from stakeholders, and changes in scope that are deemed
necessary and desirable, would be incorporated at that stage.
65. The Government recognizes that expanding and institutionalizing the scope of PPP in
the provision of infrastructure may also necessitate appropriate changes in the existing
legislative framework. It is however felt that the present framework offers sufficient
scope for PPPs in the development of infrastructure. The specific legislative
constraints for PPPs will also be reviewed and addressed during the interim review.
PART VII. SECTORAL STRATEGIES
66. The broad principles set out in this document would govern the various strategies to
be developed for each sector. The concerned Departments through their Internal PPP
Cell would finalize the sector strategies and action plans thereunder within six months
of the date this Policy comes into force.
67. IDP&IWTD would assist Government/Government Agencies in making a concerted
effort to set out an action plan for already identified project development
opportunities in various infrastructure sectors in the immediate term. IDP&IWTD
would interface with other Departments concerned, such as the Public Works, Ports &
Inland Transport Department, Urban Development, Energy, Commerce & Industries,
and Information, Tourism & Youth Services, among others, to advise on and co-
ordinate the identified and new project development activities.
24State PPP Policy for Infrastructure Projects 2025
PART VIII. SPECIAL THRUST TO DEVELOPMENT OF INFRASTRUCTURE IN
KALYANA KARNATAKA REGION DEVELOPMENT BOARD, KALABURAGI10
68. Given the special status to the Kalyana-Karnataka Region Development Board during
the year 2013 under Article 371 J of the Constitution of India, the following measures
shall be taken to encourage the development of infrastructure in this region:
a. Infrastructure Strategic Action plan for the region that would address key social
and economic Infrastructure such as roads and bridges, healthcare, educational,
drinking water supply, minor irrigation, animal husbandry, sericulture and urban
development.
b. Create a PPP Cell in the Kalyana-Karnataka Region Development Board
(KKRDB) which will be equipped to:
i. Identify potential PPP projects that can be undertaken in the region
ii. Facilitate selection of private developers for implementation of various
projects
iii. Oversee the performance of these projects
c. The Coordination Committee will monitor the progress of projects on a quarterly
basis.
d. Government shall undertake specific capacity building programs for the officers
in the region to understand the need and benefits of PPP. All projects being
implemented on PPP mode would be fast tracked to ensure faster delivery of
services.
PART IX. MODEL BID DOCUMENTS, POLICIES AND RULES FORMULATED
BY GOVERNMENT OF INDIA11
69. Government of India has brought out several model bid documents for various sectors
and the Departments will adopt them for PPP projects undertaken in the State. The
State will administer policies and rules on PPP as and when released by Government
of India.
10Vide Government Order No. IDD 07 ITS 2013 dated 30.10.2015.
11Vide Government Order No. IDD 07 ITS 2013 dated 30.10.2015.
25State PPP Policy for Infrastructure Projects 2025
PART X. SCHEDULE
A. SCHEDULE I – EVALUATION OF RISKS & RISK MITIGATION
MEASURES
Projects are subject to various types of risks during the development, construction and
operations periods. In a PPP framework, these risks are typically assigned to the parties best
able to handle them. The following table sets out the typical project risks envisaged during
the project life cycle and their mitigation measures in a standard Concession (BOT) contract.
Risk Description Assigned to Risk Mitigation Measure
I. Project Development Period
Statutory clearances needed EPC Contractor / Government shall facilitate
prior to implementation Concessionaire obtaining all such clearances
including Environmental
Clearance
Land Acquisition Government Agency Government shall set in place
appropriate process to expedite land
acquisition. The Government
Agency or implementing authority
may ensure availability of 90%
unencumbered land at the time of
tender. However, this may be
relaxed on case-to-case basis by
SLSWA / SHLCC.
Departments may constitute suitable
institutional mechanism for
handling land acquisition process.
Delay in Land acquisition Government Agency -do-
II. Construction Period
Project Design Risk EPC Contractor / Detailed technical evaluation by
Concessionaire independent Technical Consultant.
Independent Engineer entrusted
with detailed scope of work to
ensure that project conforms to
design standards and specifications.
Political Force Majeure Concession Agreement Agreement typically lays down
Event (War, invasion, armed (CA) provisions for extension in time,
conflict or act of foreign sharing of costs and payment of
enemy, strikes, agitation, compensation by the Contracting
blockade, embargo, Authority under such events.
26State PPP Policy for Infrastructure Projects 2025
Risk Description Assigned to Risk Mitigation Measure
insurrection, military action,
civil commotion)
Non-Political Force Majeure
(Floods, Earthquakes,
Drought, etc.)
Damage / Injury to 3rd EPC Contractor / Insurance generally procured by
parties Concessionaire EPC Contractor with an extension
of cross liability
Cost Overrun Risk EPC Contractor / Construction cost estimates:
Concessionaire Independent revalidation of
construction costs estimated by EPC
Contractor.
Fixed time / fixed price contracts:
Risk related to cost overrun passed
on to the EPC Contractor.
Insurance Cover
Project Completion/Time EPC Contractor / Fixed time / fixed price contract
Overrun Risk Concessionaire with EPC Contractor
Performance Security provided by
EPC Contractor, including defects
liability period
Retention Money
Equity stake in project SPV
Inflation Risk EPC Contractor / Transferred to the EPC Contractor /
Concessionaire Concessionaire under the EPC
Contract
Technology Risk EPC Contractor / Concessionaire to provide
Concessionaire warranties / commitments to
upgrade technology to meet output
specifications
Termination Risk Promoters / Termination Compensation
Concessionaire /
Substitution / Step-in Rights to
Lenders
Project lenders
III. Operations Period
Traffic/ Demand Risk Concessionaire / CA Detailed Traffic Studies by
Depending on project independent traffic consultant /
27State PPP Policy for Infrastructure Projects 2025
Risk Description Assigned to Risk Mitigation Measure
expert.
Annuity structures / Financial
Support
Revenue Risk Concessionaire / CA Traffic surveys / willingness-to-pay
studies
Annuity structures / Financial
Support
Revenue Leakage Risk Concessionaire / CA Origin-Destination surveys; tolling
infrastructure, monitoring systems
Independent Auditor
Maintenance Standards O&M Contractor / Performance Security
Concessionaire
Monitoring by Independent
Engineer
Increase in O & M costs O&M Contractor / Fixed Price Contract
Concessionaire
Injury to the Project Road O&M Contractor / Insurance Cover
users / third parties Concessionaire /
Insurance Co.
Environmental Risk O&M Contractor / Concessionaire / O&M Contractor
Concessionaire to meet the accepted environmental
norms during the operations period.
This could be enforced through
suitable clauses in the Concession
Agreement.
Termination Risk CA / Concessionaire / Termination Compensation
Lenders
Substitution / Step-in-Rights to
Project Lenders.
IV. Financing Risks
Equity Sponsors / Investors Sponsors generally required to
maintain in aggregate a minimum
shareholding in the paid-up equity
capital of the Concessionaire.
Project lenders insulated from risk
related to equity subscription
Term Debt Lenders Suitable security creation
Interest Rate Risk Concessionaire Fixed interest rates on debt, with
reset options
28State PPP Policy for Infrastructure Projects 2025
Risk Description Assigned to Risk Mitigation Measure
Adverse FX Risk Concessionaire / CA Funding through Rupee debt
In case of forex funding for critical
projects, exchange rate risk could be
fully borne by Concessionaire
through appropriate agreements and
hedging mechanisms
V. Other Risks
Expropriation, including CA Such acts defined as direct political
creeping nationalization, force Majeure events and remedies
changes in legislation, are generally provided under the
discriminatory actions on Concession Agreement.
tolls, etc.
29State PPP Policy for Infrastructure Projects 2025
B. SCHEDULE II – INSTITUTIONAL ROLES & RESPONSIBILITIES
Government / Government
Key Tasks
Agency / Organization
a. Formulation and review of policy measures;
b. General administration of policy measures;
Government of Karnataka c. Co-ordination between various Departments for
(GoK) facilitating project implementation;
d. Performance evaluation.
a. Co-ordination of policy level initiatives;
b. Assistance to SHLCC and SLSWA for PPP for evaluation
of all Infrastructure Project proposals to be implemented
through PPP;
c. Manage all activities related to policy, technical, legal
and such other matters related to PPP projects;
d. Act as a nodal agency to the Government in the
development of:
i. PPP policies and programmes, and make suitable
recommendations to the Government for its
consideration and adoption;
ii. all the infrastructure projects in the State taken on PPP
Infrastructure Development
mode; and
Ports & Inland Water
Transport Department iii. all the infrastructure projects in the State through
assisted by PPP Cell and Asset Monetization;
KSIIDC, GoK
e. Ensure that the identified PPP projects by the
Departments / Government Agencies are in conformance
to the objectives of the State;
f. Encourage participation of private sector persons in
financing, construction, maintenance and operation of
PPP Projects;
g. Co-ordinate between inter Departmental/ Agencies of the
Government;
h. Facilitate in approval process for allocation of Karnataka
Viability Gap Fund for Projects;
i. Resolve issues relating to project approval process:
i. to co-ordinate with Department of Economic Affairs,
30State PPP Policy for Infrastructure Projects 2025
Government / Government
Key Tasks
Agency / Organization
Ministry of Finance, GoI, in matters pertaining to
approval of VGF under the scheme;
ii. to co-ordinate with Central Government Ministries /
Departments / Agencies with regard to
implementation including monitoring program in
attracting private sector involvement in infrastructure
and evaluation of the implementation plan from time
to time;
j. Develop model documents/agreements for the
Infrastructure Sectors;
k. Administer and manage the Fund (KIPDF) and its assets;
PPPAC:
a. All PPP projects to be implemented in the State by
various Departments, Government Agencies and State
Corporations will be sent to PPPAC through IDP&IWTD
for vetting and advise.
b. Advise the Government as the case may be, on the project
and give recommendations or suggestions;
c. Advise, review, approve / disapprove PPP project
proposals;
d. Make recommendations in matters of promoting of
infrastructural projects needing Central Government
interventions or clearances;
e. Recommend projects for grant of viability gap fund under
the relevant scheme(s) of Government of India and
Government of Karnataka;
f. Review and suggest amendments and modifications to
Concession Agreements on the basis of Value-for-Money
and similar considerations;
g. Decide financial support under the Karnataka Viability
Gap Fund Scheme for Projects;
h. Approve scale and scope of a suo-moto proposal or
project undertaken through Swiss-Challenge Approach
and to recommend modifications of a non-financial
nature, if required;
i. Collect a small percentage of the project cost or a
31State PPP Policy for Infrastructure Projects 2025
Government / Government
Key Tasks
Agency / Organization
lumpsum amount from the successful PPP projects
towards strengthening and vetting of PPP projects.
Performance Review Unit:
a. Review and monitor PPP projects during implementation,
operation and management;
b. Review periodically the status of clearances;
c. Seek information from various PPP project
implementation Departments / Government Agencies to
compile the aforesaid quarterly reports through
information management system.
State High Level Clearance a. Facilitate and approve PPP projects over INR 500 Crore.
Committee
a. Facilitate, coordinate and scrutinise all PPP projects and
approve projects up to INR 500 Crore.
b. Resolve issues related to interdepartmental clearances,
delays / stoppages / claims / time extensions, petitions,
etc., as necessary related to PPP and Swiss Challenge
projects.
c. Approve disbursement of funds (KIPDF / KVGF) for PPP
State Level Single Window
projects.
Agency
d. Review the status of preparing (i) road map / multi-year
infrastructure action plan for individual sectors, and (ii)
annual action plan for PPP projects – by the respective
Departments for infrastructure development in the State.
e. Monitor the functions of District PPP Committee,
Department’s Internal PPP Cell.
a. Facilitate project identification, development &
implementation of PPP projects in their respective
districts;
b. Seek and obtain approvals for the PPP projects through
respective Departments;
District PPP Committee
c. Facilitate co-ordination between various Departments;
d. Facilitate obtaining clearances and approvals;
e. Facilitate selection of private developers for
implementation of various projects;
f. Oversee performance of PPP projects.
32State PPP Policy for Infrastructure Projects 2025
Government / Government
Key Tasks
Agency / Organization
a. Identify potential PPP projects that can be undertaken in
KKRDB region;
b. Seek and obtain approvals for the PPP projects through
respective Departments;
KKRDB PPP Cell
c. Facilitate selection of private developers for
implementation of various projects;
d. Oversee the performance of PPP projects.
a. Advise the Department / Government Agency in
collective functioning of developing the PPP project and
give recommendations or suggestions;
b. Conceptualize and identify PPP Projects and ensure their
conformance to the objectives of the Department;
c. Mainstream and promote PPPs as a preferred mode;
d. Review and approve / disapprove all project proposals,
project documents and other considerations related to
PPP projects;
e. Review and approve the incentives that may be proposed
for the PPP project;
f. Review project’s environmental sustainability;
g. Review and monitor PPP projects during design,
implementation, operation and management by Project
Management Unit (PMU) through a reporting
Department’s Internal PPP mechanism;
Cell h. Update PPP project progress in information management
system which will be developed and maintained by
KSIIDC on quarterly basis;
i. Prescribe time limits for clearances of PPP projects and
assist the concessionaire in obtaining statutory and other
clearances and approvals in a timely manner;
j. Provide assistance in resolving disputes in PPP projects
between Government Agency and Private Sector
Participant, and make suitable recommendations to their
Departmental heads;
k. Develop strategy and prepare road map / multi-year
infrastructure action plan (at least for five years) for
individual sectors for infrastructure development in the
State;
l. Finalize the sector strategies and annual action plan for
PPP projects and identifying plans towards PPP
33State PPP Policy for Infrastructure Projects 2025
Government / Government
Key Tasks
Agency / Organization
development;
m. Prioritize PPP projects to be undertaken and prepare an
inventory of PPP projects to be taken up for
implementation;
n. Identify inter-sectoral linkages;
o. Align sectoral policies with the PPP Policy for
Infrastructure Projects;
p. Act as a repository / knowledge centre for PPPs;
q. Advise in PPP matters including training and capacity
building of Department officers;
r. Facilitate approval of PPP project;
s. Undertake impact assessment of PPP projects which will
help in interim course correction and making appropriate
changes in the PPP framework in states and / or sectors.
Department / Government Agency would explore the
possibility of executing their projects through the PPP mode
before exercising the option of budgetary allocation. The
preference shall be to structure the project through a suitable
PPP mode. Only if the PPP modes are not providing an
optimum value for money or if the project is not feasible
through PPP mode, then, the Government Agency would
look for other possible modes of project execution.
34State PPP Policy for Infrastructure Projects 2025
C. SCHEDULE III – INCENTIVES FOR PROJECT DEVELOPMENT
1. Recognising the fact that infrastructure projects require special consideration in view
of long gestation periods, low rates of return and higher risks, incentives and support
such as tax holidays, tax exemptions, Viability Gap Fund, etc., have been provided
under the purview of the Government of India.
2. Apart from the incentives and support available to the projects, the Government
proposes to offer the following incentives in addition to the incentives provided in the
relevant policies with regard to sectors. However, duplication of incentives shall not
be considered:
A. FACILITATION
a. Where it is not possible for private investors to obtain land required for the project
on their own, the Government would acquire the land required for the project;
b. Facilitation in obtaining clearances and approvals from various agencies;
c. Facilitate in obtaining water and power required for the project.
B. ASSET-BASED SUPPORT
a. Government land may be provided, subject to availability, at concessional rates;
b. Wherever an Infrastructure Project by itself is not financially viable, the
Government may provide incentives to the PSP as part of the Concession and
allow PSP to develop suitable commercial activities to ensure a reasonable
composite internal rate of return. Such development rights would be consistent
with applicable laws and land-use, and would include commercial complexes,
hotels, housing complexes, and advertisement hoardings. Where permitted under
local regulations, this would include relaxation in the applicable Floor-Space
Index norms;
c. Develop linkage infrastructure, for projects that need such critical linkages;
d. This will not be available to the procurement made under Swiss Challenge
Route.12
C. FOREGOING REVENUE STREAMS
a. The Infrastructure Project may avail the applicable incentives from the
respective sectoral policies and other applicable policies adhering to the due
approval process.
12Amended vide Corrigendum No IDD 59 ITS 2009 dated 31.05.2010.
35State PPP Policy for Infrastructure Projects 2025
D. CONTINGENT GUARANTEES
a. In specific cases, guaranteed payment structures such as “Take-or-pay” (wherein
there is an assurance of payment for the availability of a service) or “supply-or-
pay” (wherein there is an assurance of payment for the non-availability of a
service) would be considered.
E. FINANCIAL SUPPORT
a. Viability gap finance from the Central Government: The Government of
Karnataka would sponsor the project for release of Viability Gap Fund, from the
Government of India.
b. The Government of Karnataka would also provide additional Viability Gap Fund,
over & above the VGF of the Central Government.
c. Provided that the quantum of total Viability Gap Fund shall be determined after
clearly and explicitly calculating all project costs and incentives:
i. Taking into account all costs of the projects, excluding cost of land, and land
related charges such as Stamp Duty & Conversion Fine
ii. Taking into account all other incentives granted, including asset-based support
and foregoing of revenue streams, and including any other financial incentives
granted under any other sector policy, or scheme of the Central Government,
Central Government Agency, Government or Government Agency.
d. This will not be available to the procurement made under Swiss-Challenge route13.
13Amended vide Corrigendum No IDD 59 ITS 2009 dated 31.05.2010.
36State PPP Policy for Infrastructure Projects 2025
D. SCHEDULE IV – APPLICABLE SECTORS
No. Sectors Sectors & Sub-sectors
1. Agri-Infrastructure 1. Agriculture and horticulture markets
2. Floriculture parks and markets
3. Agro-food processing and allied infrastructure (including
common-user cold storage facilities)
4. Agriculture and horticulture
a. Terminal storage
b. Post-harvest storage infrastructure
c. Logistics parks
d. Warehouses
e. Terminal Markets
5. Fisheries, Animal Husbandry Parks and Dairy infrastructure
6. Godowns
7. Food Parks
8. Soil-testing laboratories
2. Education 1. Infrastructure and facilities for educational institutions, not
on a purely commercial basis, but which satisfy a public
need.
2. Schools
3. Knowledge City
4. Vocational Training
5. Skill Development
6. Science & Technology parks
7. E-Libraries
8. Schools for children with Special Needs
3. Energy 1. Power generation, including captive power generation, as
per provisions of the Electricity Act 2003, and co-generation
projects, transmission, distribution and power trading
services.
2. Oil and Gas (origination, terminals, transmission and gas
works)
3. Liquefied Natural Gas storage facility.
4. Renewable and non-conventional energy sources (Wind,
Hydro, Solar, Tidal, Biomass and MSW)
5. Floating Solar
6. Energy Storage Systems
7. Electric Vehicle Charging Infrastructure
8. Green Hydrogen
37State PPP Policy for Infrastructure Projects 2025
No. Sectors Sectors & Sub-sectors
4. Healthcare 1. Infrastructure and facilities for healthcare, not on a purely
commercial basis, but which satisfy a public need.
2. Infrastructure and facilities for healthcare
a. Primary
b. Secondary
c. Tertiary
3. Nursing and Patient Care
4. Diagnostic Centers
5. Trauma and Rescue centers
6. Rehabilitation and training centers for physically and
mentally challenged persons.
7. Geriatric Centers
8. Medical Education Infrastructure
5. Industrial 1. Industrial Parks (including Biotechnology, Information
Infrastructure Technology parks, etc.).
2. Special Economic / Free Trade and Export Promotion
Zones.
3. Industrial Estates and Industrial Townships.
4. Marine Parks
5. Food Parks
6. Special Investment Regions
7. Development of Specific Zones like National Investment
and Manufacturing Zones
8. Corridor Development
a. Industrial Corridors
b. Infrastructure Corridors
c. Freight Corridors
9. IT Services
6. Irrigation Canals, Dams, Embankments and Weirs
7. Public Markets 1. Infrastructure and facilities for Public Markets, not on a
purely commercial basis, but which satisfy a public need.
2. Markets to promote handicrafts and produces from women
and specially abled persons
8. Tourism 1. Adventure Tourism (land based, water based and air-based
adventure activities and related infrastructure, e.g.,
Amusement, Entertainment, Theme Park)
2. Agri Tourism & Rural Tourism
3. Caravan Tourism
4. Coastal Tourism & Beach Tourism
5. Cultural Tourism (Cultural Fairs, Cultural Centers)
6. Eco Tourism (includes Nature Tourism and Wildlife
38State PPP Policy for Infrastructure Projects 2025
No. Sectors Sectors & Sub-sectors
Tourism)
7. Education Tourism
8. Film Tourism
9. Gastronomy (Cuisine) Tourism
10. Heritage Tourism, Museum
11. Inland Water Tourism
12. Maritime Tourism
13. MICE Tourism & Business Tourism (Hotels/ Resorts,
Convention Centers, Exhibition Centers, etc.)
14. Mining Tourism
15. Spiritual Tourism (includes Religious Tourism and Spiritual
Sightseeing)
16. Sports Tourism (Sports, Golf Courses)
17. Wellness Tourism
18. Other Niche Tourism Themes like Special Tourism Region
19. Ropeways and Cable Cars
9. Transportation and 1. Roads (including bridges, interchanges and flyovers)
Logistics 2. Railway systems
a. Tracks including electrical & signaling system, Tunnels,
Viaducts, Bridges
b. Rolling stock along with workshop and associated
maintenance facilities
c. Terminal infrastructure including stations and adjoining
commercial infrastructures
3. Urban transport system: MRTS, LRTS, Monorail, High-
Capacity bus systems and High-Speed Rail System
4. Airports and Airstrips
5. Minor Ports and Harbours including Capital Dredging
6. Shipyards
7. Inland Water Transport
8. Bus/ Truck/ Urban Transport Terminals and associated
public facilities such as Public Amenities Centers
9. Warehousing infrastructure (including container freight
stations, container depots, cold storage facilities and tank
farms)
10. Mechanized and Multi-storey Parking Facilities
39State PPP Policy for Infrastructure Projects 2025
No. Sectors Sectors & Sub-sectors
11. Transport Terminals
a. Inter-modal Transit Centers
b. Traffic Management Centers
12. Parking Facilities
a. Surface Parking
b. Underground public parking facilities
13. Public Bicycle Sharing System
14. Urban Public Transport (except rolling stock in case of
urban road transport)
10. Urban and 1. Township Development
Municipal 2. Commercial development with common-user facilities
Infrastructure 3. Water Supply and Sewerage including Storm Water
Drainage System
4. Desalination
5. Wastewater recycling and reuse
6. Solid Waste / Bio-Medical Waste/ Hazardous Waste:
collection, transportation, treatment and disposal facilities.
7. Energy Efficiency in
a. Street Lighting
b. Traffic signal management
8. Signage
9. e-waste management
10. Public space utilization for building landmark junctions, etc.
11. Sports and Youth 1. Sports Infrastructure
Services 2. Art & Culture Theaters
3. Playgrounds/sports/stadiums
4. Hostels/quarters in the Games villages.
5. Sports training centers and Gyms
12. Housing 1. Low cost / EWS housing
2. Affordable housing
3. Affordable Rental Housing Complex
13. Rural Development 1. Waste to energy (Agri-waste)
2. Rural Drinking Water projects
14. Tele 1. Telecommunication -Fixed network: Optic fibre/cable
communications networks which provide broadband/internet.
2. Telecommunication Towers
3. Data Centres
15. Forestry / Wildlife 1. Non-Timber Forest Products (NTFP) based value addition
units / NTFP based public markets / Forest based industries /
Bamboo Development Project / Value addition projects /
Industrial Plantation Projects on non-forest lands. (Note*)
40State PPP Policy for Infrastructure Projects 2025
No. Sectors Sectors & Sub-sectors
2. Eco-Awareness / education Infrastructure Projects like
Biological / Marine Park (Zoo, Museum, Oceanarium, etc...)
3. Large Scale Modern Timber Depots / Nurseries
4. Land Bank Development / Maintenance / Afforestation
Projects that can be leveraged for requirements under
statutory clearances like the Forest Clearance
(Note*: Wood based industry / paper or Pulp industries,
firewood / charcoal / reconstituted wood products)
Note: The sectors and sub-sectors mentioned in this policy shall be treated as an indicative
list and not as an exhaustive list.
E. SCHEDULE V – ASSET MONETIZATION
Infrastructure plays a crucial role in driving economic growth and performance. Recognizing
this significance, the Government has prioritized infrastructure investments to sustain and
accelerate economic development. To achieve investment-led growth, asset monetization and
asset recycling become essential for unlocking value from public infrastructure investments
and leveraging private sector expertise for efficient operation and management. Many public
sector assets are sub-optimally utilized and can be monetized effectively to provide greater
financial leverage and value for the Government. Towards this, the Government envisions a
greater role for private partners in both efficient management of existing assets and in
creating new infrastructure through reinvestment of the proceeds generated through asset
monetization.
Asset Monetization aims to unlock the value of investment made in public assets which have
not yet yielded appropriate returns thereby creating new sources of revenues for the State and
contributing to better financial management of government / public resources over time.
Government Agencies in Karnataka may adopt the following methodology for exploring
Asset Monetization within their respective domains –
i. Establish Infrastructure Requirements: The Asset Monetization process begins
with establishing future infrastructure requirements across all sectors coming under
the Infrastructure domain. This enables the Government Agency to leverage their
existing asset base and create infrastructure using private investment.
ii. Prepare Action Plans: The Government Agency through their Internal PPP Cell shall
prepare a multi-year action plan or an annual action plan for funding the infrastructure
requirement that could be explored through Asset Monetization.
iii. Identify Assets: Based on infrastructure need and funding requirements, the
Government Agency shall identify and prepare existing assets within their jurisdiction
which can be made available for monetization or recycling.
41State PPP Policy for Infrastructure Projects 2025
iv. Explore Monetization Models: The Government Agency shall assess various models
of monetization which enable effective utilization of the assets. It should be noted that
the adoption of monetization models depends upon various factors like asset profile,
objectives for monetization, expectations of sponsor and investors etc. and these
should be suitably taken into account.
v. Project Development: The Government Agency shall develop the monetization
project for identified asset. Necessary approvals for onboarding the Private Sector
Participant should be obtained.
vi. Frameworks for Monetization: Monetization Projects should adhere to the
contractual structure, procurement process, institutional framework as mentioned in
the Part IV – “Touchstone Principles”.
The process and workflow for undertaking monetization projects in the State is
illustrated below to provide guidance to Government Agencies through the
monetization process.
42State PPP Policy for Infrastructure Projects 2025
Establish Identify Revenue
Infrastructure Prepare Action Plans Generating /
Requirements Unutilized Assets
Create Concept note
Onboard Transaction Seek In-principle
for Monetization of
Advisor(s) Approval of SLSWA
asset(s)
Explore Monetization
Preparation of Project Vetting of Project
Models / Project
Documents Documents by PPPAC
Development
Realization of
monetization proceeds Onboard Private Seek Formal Approval
& investments in new Sector Participant of SLSWA
projects
43State PPP Policy for Infrastructure Projects 2025
F. SCHEDULE VI – PPP PROJECTS: CONCEPT NOTE TEMPLATE
This template is to guide various Departments of the Government of Karnataka in preparation
of a comprehensive ‘Concept Note’ for PPP projects. In the conceptualization phase, it is
suggested that the details of the proposed projects mentioned in this template can be
discussed internally in the Departments. The information can be analyzed and vetted by the
internal PPP Cell of the Departments before submission to the Infrastructure Development
Department.
Inclusion of this relevant information / aspects in the Concept Note would support
implementing agencies /stakeholders like KKRDB, etc., to gain an understanding of the
project and also, enable the Heads of Departments / Deputy Commissioners of districts, in the
selection of Transaction Advisors and implementation of the project.
No. Sections Details to be mentioned
1. Project concept 1. Need / Relevance of the project.
2. Demand aspects of the project.
3. Possible revenue streams in the project.
4. Role of the private entity who will implement / operate
the project.
5. Type of private entity which shall be suitable for project
implementation / operations. For example, real estate
developers, infrastructure firms, hospital operators,
hospitality / hotel operators, large retailers, ETP
operators, parking operators, etc.
For example, for a ‘stadium redevelopment project’, the need of
the project would be to develop good infrastructure for sports in
the city and to improve the existing facilities. The role of the
private entity would be to finance the refurbishment /
renovation of the facilities and develop ancillary facilities like
food court. The private entity would also look at the operation
and maintenance of the project for a specified period.
2. Site 1. Extent of land of the project site.
conditions 2. Location coordinates and address of the site.
44State PPP Policy for Infrastructure Projects 2025
No. Sections Details to be mentioned
3. Details on the condition of the site in terms of number and
type of existing structures, built-up areas of the existing
structures, etc.,
4. Type of land use and details about zoning / use premises
(such as industrial / commercial / residential / mixed-use).
5. Pictures of the site, if available.
6. In the case of brownfield assets (such as existing hospital /
hotel / park / etc.), provide existing usage of the asset.
Any concerns on the site which may affect the project such as
‘approach road’, ‘undulated land’, ‘site contains natural water
body or stream’, ‘HT transmission lines passing through the
site’, etc., must be anticipated.
3. Project 1. Demand aspects of the project.
commercial 2. Possible revenue streams in the project.
For example, for a ‘stadium redevelopment project’, demand
aspects can be provided based on the existing footfalls at the
stadium on a daily / monthly / yearly basis, the type of facilities
provisioned and projected increase in the number of users /
players, etc. Possible revenue streams can comprise membership
fees, daily rentals for the sports facilities / occasional rentals for
events, rental incomes from schools / sports clubs for training /
practice, etc.
4. Project Project components would include construction /
components development / renovation / any other components.
For example, for a ‘stadium redevelopment project’,
project components may include sports facilities available / to
be developed (tennis court, cricket ground, football turf,
swimming pool, etc.), basic amenities (changing rooms, toilets,
lockers, etc.), security devices, food & beverages area, space
for convention center, garden / park, open space, internal roads,
etc.
45State PPP Policy for Infrastructure Projects 2025
No. Sections Details to be mentioned
5. Project cost Capital expenditure, cost for operation and maintenance of the
project, recurring costs expected in the project.
6. Project The departments may provide the background (or reasons for
background inception) of the project, current status of the project or any
related information.
7. Basis for PPP The department may provide the justification for identifying
the project implementation on a PPP basis. This may include:
1. State Policy / Budget / Announcements / Directions.
2. Financial Assistance by International Financial Institutions
/ Central or State Governments / any other.
3. Higher revenue generation by implementing the project on
a PPP basis.
4. Knowledge and Experience / Funding capability / Risk-
taking ability / First movers advantage / Innovations / Any
other rationale to justify the need to partner with the private
sector.
5. Private sector efficiencies for development and operations.
8. Approval of The Concept Note shall be discussed and vetted by the Internal
Administrative PPP Cell of the departments and shall be submitted to IDD with
Department the approval of the Administrative Department.
46State PPP Policy for Infrastructure Projects 2025
AD to constitute an Internal
PPP Cell as per the PPP
Policy 2025
47State PPP Policy for Infrastructure Projects 2025
G. SCHEDULE VII – TIMELINE FOR DEVELOPING PPP PROJECTS IN THE
STATE
The State Government is keen on promoting infrastructure development through PPP mode.
The effectiveness and success of PPP projects largely depend on their planning and
development being executed within a specified timeframe. The existing practise of
developing PPP projects in the State has witnessed long gestation period in the preparatory
stage as well as the private partner (Concessionaire) selection stage. Government
Departments should adhere to the timeline for implementing PPP projects for several critical
reasons:
1. Efficiency and Productivity: Adhering to a timeline ensures that the project
progresses smoothly without unnecessary delays, leading to efficient use of resources
and higher productivity.
2. Cost Management: Delays can lead to significant cost overruns due to factors like
inflation, increased labour costs, and higher material prices. Sticking to a timeline
helps in controlling these costs and keeping the project within budget.
3. Investor Confidence: Private investors are more likely to participate and invest in
PPP projects if they have confidence that the projects will be completed on time.
Timely completion builds investor trust and encourages future investments in similar
projects.
4. Public Trust and Accountability: Timely project completion enhances public trust
in government efficiency and accountability. It demonstrates the government's
commitment to delivering promised services and infrastructure improvements.
5. Risk Mitigation: Delays can expose projects to various risks, including political,
economic, and regulatory changes. Adhering to the timeline reduces the exposure to
these risks and helps in maintaining project stability.
6. Optimal Resource Utilization: Timely execution ensures that resources such as
labour, materials, and capital are used effectively. It prevents resource wastage and
ensures that all inputs are utilized to their fullest potential.
7. Economic Impact: Timely completion of PPP projects ensures that the benefits, such
as improved infrastructure and services, are delivered to the public sooner. This can
have a positive impact on the economy by enhancing productivity, connectivity, and
overall quality of life.
48State PPP Policy for Infrastructure Projects 2025
Responsibility
Stage Name of Activity Administrative Remarks
IDP&IWTD
Department
Preparation of Concept
I. ✓ -
Note
Approval /
II. Approval of Concept Note ✓ ✓ Ratification
by SLSWA
Appointment of
III. ✓ -
Transaction Advisor (TA)
Preparation of Project
IV. ✓ -
Documents by TA
Review and Submission
V. ✓ -
of Project Documents
PPPAC is
convened
within 7 days
Appraisal and Approval
VI. ✓ ✓ after
of Project Documents
receiving
project
documents.
Concurrence
Project Approval by
VII. ✓ ✓ for Project
SLSWA / SHLCC
Tendering
Tender Process and
VIII. Appointment of Private ✓ -
Partner / Concessionaire
In summary, adhering to timelines in PPP project development is essential for ensuring
efficiency, cost-effectiveness, and stakeholder satisfaction. It builds trust among investors,
the public, and other stakeholders, and contributes to the overall success and sustainability of
the projects. In this regard, IDP&IWTD has prepared the sequence of activities and their
49R.N.I. No. KARBIL/2001/47147 POSTAL REGN. No. RNP/KA/BGS/2202/2017-19
Licensed to post without prepayment WPP No. 297
57
indicative timeline which may be adopted by the Administrative Department for implementing PPP
projects.
Government Agency shall initiate the PPP life cycle by preparing Concept Note for the project
proposed under PPP mode. Subsequently, Government Agency shall obtain approval and onboard
Transaction Advisor (TA) for preparing the required project documents. Government Agency shall
ensure that the project activities are completed within the stipulated timeframe. Further, the PPP
project shall be vetted by PPPAC before obtaining approval from SLSWA / SHLCC. Finally,
Government Agency shall obtain necessary administrative approvals required for the project for
floating the tender for onboarding private partner by adhering to the KTPP Act and Rules.
By order and in the name of the
Governor of Karnataka
(Shaila R. Gorwar)
Under Secretary to Government - 1
Infrastructure Development Ports &
Inland Water Transport Department
Tel: 080 - 2203 4149
[
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