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LATEST NEWS UPDATES | UN warns India against disaster risks in major PPP projects -Pradeep Thakur

UN warns India against disaster risks in major PPP projects -Pradeep Thakur

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published Published on Jun 23, 2013   modified Modified on Jun 23, 2013
-The Times of India


NEW DELHI: A United Nations (UN) report has warned India that it is at greater risk by opting for public private partnership (PPP) mode of investment for raising its public infrastructure where the government has less control over its executing private partners and the latter has little interest in long term safety of the projects.

A UN study, the Global Assessment Report (GAR) on disaster risk reduction, released earlier this month for Asia Pacific has warned India of its huge infrastructure assets exposed to disaster risk, something like what we have experienced post release of the report in Uttarakhand where flash floods have washed away properties worth thousands of crores while thousands have perished.

The report says: "Increasingly, in India, PPPs are emerging preferred mode of investment for publicly managed construction. These partnerships do not necessarily lead to improved disaster risk assessment and management, and may underplay disaster risks or lead to their transfer as shared costs to the public sector or to city residents."

The 2013 GAR study on disaster risk reduction is the third biennial report coordinated by the UN's Office for Disaster Risk Reduction (UNISDR) and has analysed many of the country's largest infrastructure projects for their risk exposure to natural and man-made calamities.

The findings reveal a sample analysis of 136 port cities with populations of more than 1 million predicting that currently North America has the highest volume of exposed economic assets while it is the population which is at greater risk in Asia.

The GAR warns India -- which has projected nearly $1 trillion worth of investments for infrastructure development in the 12th Five Year Plan - of greater economic losses from unsafe public property facing disaster risk. The report puts the estimated exposure of economic assets in Mumbai alone to increase from $46 billion in 2005 to $1,598 billion in 2070. Other Indian cities where large PPP assets are planned face similar risk.

"Owing to economic and urban growth, natural and artificial subsidence, sea level rise and climate change, this exposure is likely to increase dramatically, particularly in low and middle-income countries," according to GAR findings.

Uttarakhand too is prone to earthquakes. Almost half of the state falls in high earthquake zone. Most disasters that could occur haven't happened yet, the UN report warns, estimating total expected annual global loss from earthquakes and cyclone wind damage alone to $180 billion a year. "This figure does not include the significant cost of local disasters from floods, landslides, fires and storms or the cost of business interruption," it added.

Elsewhere in India, the report cautions against haphazard development in urban areas where "the urban population is expected to grow from 379 million in 2010 to 606 million in 2030 and 875 million in 2050." It seeks the government to ensure adequate regulatory mechanism that guarantees private constructions invested in earthquake resistant housing developments.

The UN calls the government to "integrate disaster risk information into investment decisions; building public-private risk governance and disclosing disaster risks and costs on balancesheets of companies." It says innovative companies worldwide have already begun to move in this direction, identifying disaster hot spots in their supply chains, reporting on risk reduction measures and forging partnerships with municipal governments."

The report has another concern area, the export oriented special economic zones (SEZs), many of which are located in hazard-exposed areas. "The number of export oriented SEZs has expanded from 176 zones in 47 countries in 1986 to 3,500 zones in 130 countries in 2006. Many such zones are located in hazard-exposed areas increasing disaster risks," it added. India has one of the largest expansions of SEZs, with ineffective regulatory control.

GAR Concerns

* Total direct losses due to natural disasters in 40 low and middle income countries amount to $305 billion over the last 30 years.

* Direct disaster losses are at least 50% higher than internationally reported figures.

* Globalised supply chains create new vulnerabilities: Toyota lost $1.2 billion in revenue from the 2011 Japan earthquake; India worst affected with reductions in production by 70%.

* SEZs are considered high risk zones. The number of export oriented SEZs has expanded from 176 zones in 47 countries in 1986 to 3,500 zones in 130 countries in 2006.


The Times of India, 23 June, 2013, http://timesofindia.indiatimes.com/india/UN-warns-India-against-disaster-risks-in-major-PPP-projects/articleshow/20730010.cms


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