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Tuesday, 19 January 2021 03:07
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From a modern electricity law to roads, airports and even metros, the PPP framework was created by Gajendra Haldea

 

His counter-guarantee saved Manmohan Singh the blushes in the Enron case, but this didn’t stop him from, later on, filing a case against the way in which DVB was privatised. He successfully fought top ministers to get the Delhi & Mumbai airport privatisation process cleaned up …

 

What you are writing on Enron is rubbish … get some proper information and then write”. Harsh words from Gajendra Haldea at our very first meeting three decades ago, after I barged into his room and, to get him to share information on the Enron deal, lied that his brother Prithvi had asked me to meet him; as joint secretary in the finance ministry, Haldea was working on the counter-guarantee Enron wanted in the 1990s. “I have a job to do and”, apparently unmoved by my ‘recommendation’ (!), he added, “it is not my job to do your job”.
Though Haldea never divulged the contents of what he was working on—and it was several years later that we became friends—the enormity of his contribution became evident when Enron demanded compensation. Even as the political system was pressurising the finance ministry to clear Enron’s counter-guarantee, Haldea ring-fenced the central government to ensure that, even as the Maharashtra government guaranteed the project, the Centre’s liability was restricted. When the project went belly-up after the BJP decided to throw Enron into the Arabian Sea, it was this that saved top finance ministry officials, including finance minister Manmohan Singh, the blushes and perhaps even worse.
Astonishingly, for all the work Haldea put in—even his detractors admit he was the father of PPP in infrastructure—when he was sent to the Planning Commission several years later, it was as an advisor to his mentor, deputy chairman Montek Singh Ahluwalia, not as a Member; his erstwhile bosses, it would appear, were happy to have him, but did not give him the official position he both deserved and needed in order to push his agenda. 
Haldea wrote the new Electricity Act and almost all private projects in roads, airports, metros, or ports in India today are based on Haldea’s concession agreements. But, unlike most who would have rested after developing the conceptual framework, Haldea fought hard to protect what he had created, and he wasn’t worried if this upset others. Hardly surprising, then, that former Cabinet Secretary TSR Subramanian said India would have been better off paying Haldea a billion dollars so that the infrastructure sector could move on without his interference—“towards the end of my tenure, I found that he was in fact worth five billion dollars!”, TSR  wrote in his autobiography (bit.ly/2N78ibv).
So, when Haldea felt there was favouritism in the privatisation of the Delhi and Mumbai airports, he took on powerful UPA ministers who wanted to award the contracts quickly. But with his objections there in writing, the government had no choice but to appoint a group of experts under Delhi Metro chief E Sreedharan (ironic, since Haldea and Sreedharan were at loggerheads as well) which agreed with most of the points he had made (bit.ly/2XP0D3K). 
Haldea’s Electricity Act of 2003, written after studying the laws in various countries, built a trajectory—and a method—to usher in reforms. So, users were to have ‘open access’ that brought in competition by allowing them, over time, to buy power from suppliers from even other parts of the country and, to cushion the state electricity boards, a ‘cross-subsidy surcharge’ was to be given to them; this was to be lowered over a fixed period. Two decades later, few governments have, sadly, implemented the law in its true spirit.
To that extent, privatising Delhi Vidyut Board (DVB) was after Haldea’s heart, but he filed a court case against it—as a private citizen—as he argued the process had huge flaws, including Rs 4,500-crore of post-bid sweeteners (bit.ly/2LZdXji), fairly small loss-reduction targets and, in a sense, just replaced a public monopoly with a private one; it didn’t help, Haldea alleged, that the valuation of DVB’s assets was hugely flawed. Several years later, the Delhi High Court agreed with most of what Haldea had argued (bit.ly/35PKnEd) but said that too many years had passed and so it could not undo what had already been done! 
While in service, Haldea even filed a case against Odisha’s Gridco selling power to the central Power Trading Corporation—it bought it at Rs 1.1 from units within the state and sold it to PTC at Rs 4.7—at a mark-up much higher than what was allowed by the rules put in place by the electricity regulator CERC, and was tantamount to profiteering at the expense of the citizenry, apart from vitiating the concept of one-country-one-market.
One company that Haldea believed was really profiteering, of course, is IL&FS, though not many supported him at that point. With so many successful projects under its belt, IL&FS was the poster-boy of effective infrastructure development through good risk-management; we now know, of course, that IL&FS’s risk-management was simply hiding the risk off balance sheet and hiding so much of the risk that it almost wrecked the country’s financial system. A study published under Haldea’s guidance (goo.gl/eD6aWu) laid bare how IL&FS raked in unconscionable amounts of money in the Noida Toll Bridge. Indeed, it turns out, the IL&FS model worked best under bureaucratic cover (bit.ly/3bGJMIG), which is what its boss Ravi Parthasarathy excelled in providing. 
At the end of the day, while Haldea too realised that projects ran into trouble and needed rescuing, his model was to do this via a contract—once revenues fell by a certain amount, the period of concession could be increased by a pre-set formula—while many others felt that a committee would do a better job of renegotiating; Haldea believed the latter involved too much discretion and, thereby, corruption. While the jury remains out on this, there can be little doubt that clear contracts—based on equally clear principles—are critical if PPP is to remain viable; and it is equally clear that unless you fight for them, the best-constructed frameworks mean little. For that, we are eternally grateful to Haldea.
Postscript: It is not clear whether Haldea had a premonition that he would be laid low by Covid—that stopped other critical treatment he was getting—but his last set of passionate and brilliantly argued articles were about how the government was risking our lives by both fudging the data on the spread and by using unreliable RAT tests.

 

Last Updated ( Tuesday, 19 January 2021 03:09 )
 

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