LEASE (PPP MODEL):
In PPP, Lease is a form where the government owns the
asset, but the private company operates and maintains it for
a fixed period and pays a lease fee.
A Lease is a contractual arrangement in which a
government authority (Lessor) leases public assets to
a private firm (Lessee).
The private partner assumes full responsibility for
operations and partial responsibility for investments over
a fixed period, typically 10–15 years.
Private Firm
operate and
partially invest
Revenue Structure:
User fees cover private costs and profit, surplus goes to
government for capital use.
Key feauture:
Ensures public ownership while leveraging private
sector efficiency in operations and maintenance.
Applications:
Government → gives → Asset (through lease) → to
Private Firm
Private Firm → Operates & sometimes partially
invests
Users → Pay → Fees to Private Firm
Utility services such as water supply, electricity
distribution, and transport terminals.
→
Lease: Government leases asset private partner
operates and invests partially tariff shared.
→
Private Firm → Pays lease rent → to Government
Service Provider works under the Private Firm, NOT
directly under government.
Government → Private Firm → Service Provider
LEASE DEVELOP OPERATE TRANSFER (LDOT)
The government leases an existing facility to a
private company.
The private company must develop/upgrade it,
operate it for a fixed time, earn money, and finally
transfer it back to the government.
→
→
LDOT:Govt Lease Private Party
Operate Transfer back Govt
→
→
→ Develop +
Ownership : Government owns the asset (public asset like a
station, road, utility, etc.)
Lease Agreement : Government leases the asset to the Private
Firm (Lessee/SPV) for a fixed period.
Develop + Operate : The private firm develops, upgrades,
manages, and operates the facility.It gets revenue (user fees,
profits).
Service Provider: The private firm can contract a service
provider to run operations.
Sources of Finance: Loans, equity, and other finance sources
go to the private firm, not the government.
Transfer: After the lease period ends, the asset is transferred
back to the government.
EXAMPLES:
Sabarmati Riverfront Development, Ahmedabad
Urban waterfront leased for development and
operation
DESIGN BUILD FINANCE OPERATE (DBFO)
The private party handles the entire lifecycle of the
project:
Design → Construction → Investment → Operation.
Government owns the asset, but private sector recovers
money through user fees or annuity.
DBFO : Govt Gives land Private Party Design +
Build + Finance + Operate Revenue collection
Govt ownership stays
→
→
→
→
→
EXAMPLES:
Yamuna Expressway, Uttar Pradesh
Jaypee Group built and operates under DBFO
Government gives concession → “You design, build,
finance and operate this project.”
Private partner invests money, builds it, runs it,
earns from users, then hands it back.