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Public-private financial consortia existed since the beginning of organized government which had to engage into cooperation with private units in a number of activities, such as privateer shipping, treasure and public finance, colonial expansion, organizing events, trade and commerce. In fact, for as long as the world has been concerned with the concept of infrastructure, the public-private cooperation has obviously been at a premium. Having undergone their fair share of variations and global spread, public-private partnerships, or the PPPs, have acquired an extremely high level of popularity and iconic status around the world. In a general network of types of possible consortia, public-private partnerships have become extremely important and essential in the long-term public infrastructure projects. 

 According to Graeme Hodge and Carsten Greve (2010), there are five possible families of partnerships between the public and private financial institutions. They include institutional cooperation for risk sharing and joint production, long-term large-scale infrastructure provision which is centered on the strict specification of outputs in long-term agreements, public policy networks which are characterized by loose stakeholder relationships, community development and civil society, urban renovation projects and downtown economic development. The above-mentioned families have unique features and characteristics, however, long-term infrastructure cooperation and provision is of particular interest as it covers a wide range of arrangements, such as O&M (operations and maintenance), WAA (wrap-around addition), BOOT (build, own, operate, transfer), etc. It is of vital importance to note that the conceptual types and organizational arrangements undertaken within the frame of a LTIC will greatly depend on the ideology, strategies and persuasions of the sides participating in PPPs.

The project analyzed in the given research paper belongs to the category of long-term infrastructure cooperation, and is titled The Cochin International Airport Project. Cochin International Airport was the first airport to have been built in India with investments from entities of the private sector. The project was a small part of a much bigger picture in India at the time. In the year 1991, apart from new liberalization policies, the government of India placed particular importance on creating proper infrastructure for boosting the economy. Moreover, reports indicate that airplane passenger figures in India were the fastest growing in the world, which is predicted to increase to a number of 200 million a year by 2020. In order to acquire certain level of competitive edge in the global context, India needed infrastructure facilities of international standard. The public sector of India resorted to accumulating private investments due to the fact that the Director General of Civil Aviation and the Airport Authority of India were unable to provide the necessary financial assets.

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CIAP is considered to be a wholesale (output is sold to distributors and producers), flow type of project (use is required in order to generate value), whose main customers are, for sure, the airlines. The airport was set up on a Build-Own-Operate scheme. It was financed by equity and debt combination. The structure of capital of Cochin International Airport Project in 2001 included equity from public investors (62%), such as government of Kerala, BPCL, SBI, IOB & Dhanlakshmi Bank, Air India; private investors (38%), such as NRI directors, Indian residents, NRIs, Federal Bank, and Alpha Retail. The following procedures and innovations were implemented within the scope of the project: up to 74% of foreign equity participation was allowed, absence of necessity for government approval in private participation in the airports, setting up of the Airport Approval Commission to conduct the financial audit and scrutinize proposals for new airports.

The following incentives and benefits were offered to the financial institutions from a private sector by the public investors: 100% deduction of profits for income tax for the first 5 years, 30% deduction of profits for income tax for the next 5 years, 40% of the infrastructure profit deductible for financial entities with long-term financial support for infrastructure project. The incentives mentioned above were offered not only to new companies that invested in the infrastructure, but also to agencies that made investments in refinement of existing airport objects. In addition, the Kochi International Airport Society, which was established as a charitable society in 1993, offered an interest-free deposit package to the public. According to the scheme, individual investors would have to provide interest free deposits of Rs.5000 for 6 years. All investors were also granted a waiver of entry fee, a separate check-in counter, and special lounges. In addition, 2 million native Keralites who were working abroad in the Gulf countries and visited their native land quite often were persuaded in an unwavering need to build a proper airport infrastructure in Cochin.  

The role of each member of consortium cannot be underestimated. The government structures contributed 62 % of the project finances in total. The representatives of governmental bodies worked hard in coming up with ways to attract financial support and sustain economic growth by the means of expanding and refining the infrastructure. Representatives of a private sector risked their financial assets by investing into a new project, unknown to the public as yet, however, a very promising one. V.J. Kurien, a bureaucrat from the Indian Administrative Service, came up with ideas for financing the airport in the first place. He proposed seeking help of NRIs for financing the construction activities. The government supported the effort by offering Indira Vikas Patra worth 50% of the sum deposited. The liberating power of incentives helped a lot of investors make their final decisions and contribute to the development of infrastructure India needed so badly. Both commercial banks and saving’s banks registered deposits from the public and NRIs and made direct loans to various groups and entities. They also invested in shares. Moreover, the Federal Bank had provided a loan that was replaced later by a loan from the Housing and Urban Development Corporation. Most importantly, members of the consortium managed to sustain the balance between debt and equity rates for the project successful implementation.

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Given the fact that Cochin International Airport Project was the first one to involve the private sector investment, the impact of consortium was enormous in terms of setting up a scheme for future cooperation and mixing of financial assistance in the country. The impact of each member of the given cooperation event consisted in fulfilling consortium-internal tasks, such as facilitating tool exchange and general knowledge, implementing specific information exchange between participants of the consortium, developing standard and rigid practices and procedures for the existence of consortia in the future (drawing up contracts, rules and legal exit strategies). Consortium-external tasks were fulfilled, as well, through advertising consortium to potential investors and customers. The fact that so many investors from both sides were involved in such an unprecedented large-scale project brought the newly-created airport more publicity and attention. The union of efforts launched on so many different fronts of private and public sector in order for the first mixed-cooperation airport to be built helped the project find its way among other important global beginnings. The impact of public-private consortia within the scope of Cochin International Airport Project also consisted in having a leverage of influence on the way homogeneous clusters interacted with heterogeneous demands within heterogeneous entity of the consortium in an attempt to pool knowledge, talents and finances.

The key stakeholders in the Cochin International Airport Project comprised private participants, such as high net worth industrialists, mostly NRIs (non-resident Indians) from more than thirty countries around the world and public sector members from the Kerala government, the largest shareholder of the given project. The project itself was a wholesale, flow type project, built on a Build-Own-Operate scheme and financed by a mix of debt and equity.

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