Tamil Nadu Infrastructure Development Bill, 2012
The Government of Tamil Nadu published L.A. Bill No. 24 of 2012 on 8 May 2012 after its introduction in the Tamil Nadu Legislative Assembly. The Bill proposes a statewide framework for financing, selecting and implementing major infrastructure projects, including projects involving private sector participation, and for establishing the Tamil Nadu Infrastructure Development Board. As published, it is a Bill and would come into force only on a date appointed by the Government through notification.
What the Bill proposes
The Tamil Nadu Infrastructure Development Bill, 2012 proposes an enabling and institutional framework for the financing, design, construction, maintenance and operation of infrastructure projects. It covers projects implemented directly by public agencies and projects delivered through public private partnerships.
The proposed law would extend across Tamil Nadu. It would generally apply to projects valued above rupees five hundred crore that are implemented by a public agency. The Government could also apply it, by general or special order, to a public private partnership project below that value.
Projects undertaken by the Central Government or a Central Government public sector undertaking, independently or jointly with the State Government, would be excluded.
Who would be affected
The Tamil Nadu Infrastructure Development Bill, 2012 would principally affect:
- State Government departments and public sector undertakings.
- Government companies, statutory boards and local authorities.
- Cooperative institutions, State universities, and societies or trusts formed, owned or controlled by the Government.
- Private sector participants entering infrastructure partnerships with public agencies.
- Concessionaires responsible for project investment, development, operation or maintenance.
- Users who may be required to pay a charge, fee or other amount for an infrastructure facility.
Project framework
The Tamil Nadu Infrastructure Development Bill, 2012 defines a public private partnership as an arrangement in which the private participant undertakes investment or responsibilities such as design, development, construction, maintenance or operation. Risks must be allocated so that the private participant carries risk beyond design and construction, with payment linked to performance through user charges, annuities or unitary payments.
Key proposed provisions include:
- Feasibility studies covering technical, social, economic and financial viability, demand, technology, cost, implementation time, and social and environmental impact.
- Detailed project studies covering capital cost, technology, specifications, schedules, financing and implementation.
- Possible State support through subsidies or capital grants, loans, Government guarantees, escrow arrangements, development rights over land, and specified tax or fee incentives.
- Inclusion of land cost in project value where the private participant must bear that cost.
Infrastructure Development Board
The Tamil Nadu Infrastructure Development Bill, 2012 proposes that the Government may establish the Tamil Nadu Infrastructure Development Board, headquartered in Chennai. The Chief Minister would chair the Board, with senior ministers and Government secretaries as members.
The Board could request project information, inspect and monitor projects, coordinate public private partnership execution, manage the Project Preparation Fund, support capacity building and regulate its own procedures. An Executive Committee would exercise powers and functions delegated by the Board.
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Common questions
Does this Gazette publication mean the Bill was already in force on 8 May 2012?
No. The publication identifies it as a Bill introduced in the Tamil Nadu Legislative Assembly. It states that the proposed law would come into force on a date appointed by the Government through notification.
Would every infrastructure project in Tamil Nadu come under the proposed law?
No. It would generally apply to public agency projects valued above rupees five hundred crore. The Government could extend it to a lower value public private partnership project by general or special order.
Can land rights form part of State support for a private infrastructure participant?
Yes. The proposed forms of State support include conferring a right to develop land. The Bill does not provide further details in the supplied text.
Does the Bill allow users to be charged for infrastructure services?
The Bill recognises user charges as one possible performance linked payment in a public private partnership. It defines a user levy as a user charge, fee or other amount payable by the user of an infrastructure facility.
