Sharing of Risks and Rewards in Public-Private Partnerships for Conservation and Management of Heritage Monuments in India: Exploring the Possible Contours of a Model Concession Agreement

Abstract

Public-private partnerships (PPP's) have been successfully implemented in a large number of basic infrastructure projects and in the provisioning of public services; and this model has been found to achieve better cost-efficiencies and improved delivery of customer services under certain circumstances. The PPP model has also been applied for the development of heritage properties in a few cases, but the basic incentives for the private partner in most of these implementations have remained limited to the philanthropic/ “goodwill” aspects, availability of tax concessions, advertising opportunities or real-estate prospects, with limited transfer of operational risks. Evolving a comprehensive model with private partner-led management of an entire heritage property has not been easy, and most proposals have not quite addressed the concerns regarding “site-capture” and commercialization raised by cultural and citizens’ constituencies.

This paper begins with a brief introduction to some of the PPP projects in heritage conservation in India, and examines the allocation of risks and rewards to the private partner under the contractual agreements. An attempt has also been made to list the specific legal issues and difficulties that may arise in drafting an agreement for such projects which stipulate more meaningful participation and greater risk-taking by the private partner. The paper then suggests the broad contours of a model concession agreement that can address the concerns of various stakeholders in the cultural property management process, and at the same time, one that can also protect and sufficiently incentivise the private operator. The contractual framework is based largely on the “Build-Operate-Transfer” partnership model, and has been suitably adapted to the peculiarities of the Indian legal situation regarding protection of historical sites and the problems faced in enforcement of property contracts.

Keywords: India, Public Private Partnership, Heritage Conservation, Heritage Management, Model Concession Agreement, Concession Contracts

JEL Classification: K12, K23