Planning Commission Suggests Refurbishing PPP Appraisal Process

The appraisal process for Public-Private Partnership (PPP) projects is set for an overhaul, with the Planning Commission wanting to ensure that they stand the test of scrutiny. This will also enable to prevent future conflicts in the undertaking of these projects, which could tarnish the image of the government.

Review of projects by PPPAC:

Since the past eight years the PPP appraisal Committee (PPPAC) has been in charge of reviewing such projects. As revealed by a senior Plan panel member, a high-level committee will be set up with the Cabinet secretary as chairman, to review the current process followed by the PPPAC. The review will be conducted based on a detailed analysis of the various issues involved in the process.

Commission moots for transparency in review:

Based on the findings of the review, the Planning Commission will prepare a detailed report, which will be submitted to the Cabinet within six weeks. The Commission wants to ensure that the review conducted by the committee is done in a transparent and diligent manner. The Economic Affairs secretary heads the PPPAC, which also comprises other officials holding a similar rank in other departments like the Planning, Legal affairs  and Expenditure departments. Besides, it also consists of secretaries belonging to these departments.

Stumbling blocks sabotaging PPP projects:

The current system for appraisal of PPP projects is based on inter-ministerial processes which are approved by the Cabinet. It is on similar lines to that conducted by the Public Investment Board for scrutinizing public sector investments. It has been seen that a number of PPP projects have lost steam due to various stumbling blocks like contingent liabilities, extend of investment and the terms of concession agreement.

Instances of Private Pullouts:

There have been many instances of private company pullouts from PPP projects this year. Notable among them is the case in which infra majors, GMR and GVK, exited from many highway projects worth Rs.10,700 crore, collectively committed in conjugation with the Highways Authority of India. In another similar instance, Reliance Infrastructure withdrew from the Rs.5,800 crore Airport Express Line project, for which it had partnered with Delhi Metro Rail Corporation (DMRC).

Stringency required in processing PPPAC projects:

It is imperative to ensure that the system with regards to allocation and appraisal of PPP projects is done in a transparent and diligent manner. This process assumes high importance in the backdrop of the intense levels of scrutiny and accountability to which government decisions, especially those involving private companies, are subjected to. Hence, it is important to ensure that the processing of PPPAC projects is done in a more stringent manner.

Process of appraisal:

The approval that the PPPAC provides is based on a detailed analytic report prepared by the appraisal unit of the Planning Commission. However, it is the committee that decides on inter-ministerial disputes that arise in such projects, often overlooking the suggestions made by the Plan panel. The decision taken by the committee is then approved by the Cabinet. Many state government officials involved in PPP projects have a different take on this issue. They are of the opinion that the suggestions made by the Planning commission should not necessarily be binding on the PPPAC. It has also been felt that project proponents should be the driving force behind PPP projects.