According to India Ratings and Research (Ind-Ra) the establishment of a fibre optic network through a public private partnership (PPP) model under the BharatNet project provides a unique growth opportunity for the private infrastructure sector.
However, the firm emphasised that the allocation of risk in concession agreements would be crucial for the success of the PPP model and the availability of debt capital.
As per Ind-Ra, the nature of risks will differ for BharatNet compared to traditional infrastructure assets because of the wide geographical area of the project, technology involved, competition in the telecom space and associated risks.
In addition, the ratings agency feels that the advent of PPP models in telecom, electric bus markets, rail infrastructure, advanced metering infrastructure in the electricity network, etc., augurs well for the private sector.
Although it cautioned that delays in right of way (RoW) can affect the completion of the project and the revenue potential of the network, considering that BharatNet phase II has been affected by significant delays, including delays in securing RoW.
Additionally, network uptime, the design of the asset, and technology will likely determine maintenance requirements and network uptime during operations.
The PPP framework requires at least 98 per cent network uptime. However, Inda-Ra reported that the current network has an uptime of 58 per cent as of November 30, 2020.
