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Planning Commission wants overhaul of public private partnership appraisal process

The PPP Appraisal Committee (PPPAC) reviews such projects and has done so for the past eight years.

, ET Bureau|
Last Updated: Oct 24, 2013, 03.00 AM IST
The PPP Appraisal Committee (PPPAC) reviews such projects and has done so for the past eight years.
The PPP Appraisal Committee (PPPAC) reviews such projects and has done so for the past eight years.
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NEW DELHI: The Planning Commission wants the appraisal process for public private partnership (PPP) projects overhauled to make sure that it can stand up to scrutiny and that there’s little room for future conflict as this could have a significant impact on the government.

The PPP Appraisal Committee (PPPAC) reviews such projects and has done so for the past eight years. “A high-level committee under the chairmanship of cabinet secretary may be set up to review the current PPPAC process,” said a senior Plan panel member who didn’t want to be identified. “The review will be based on a note which will list the different issues involved in the process.

The note is currently being prepared by the commission and will be submitted to the Cabinet within six weeks.” The Planning Commission now wants the committee to examine the process so that it’s transparent and due diligence takes place. PPPAC is headed by the economic affairs secretary and comprises officials of the same rank at the planning, expenditure and legal affairs departments, apart from secretaries of concerned ministries.

The present system is based on the inter-ministerial process approved by Cabinet and parallels that of the Public Investment Board for public sector investment. Several PPP projects have foundered over issues such as contingent liabilities, level of investment and concession agreement terms.

GMR and GVK this year exited highway projects collectively worth Rs 10,700 crore with the National Highways Authority of India. More recently, Reliance Infrastructure pulled out of the Rs 5,800-crore Airport Express Line in which it had partnered Delhi Metro Rail Corp.

“Given the increased level of scrutiny and accountability to which government decision making is subjected, especially decisions involving private parties, it is desirable to ensure that the system is transparent and appraisal notes reflect due diligence,” said the official cited above.

“In view of the involvement of private sector entities in PPP projects, it is necessary to ensure that the practice for processing PPPAC projects is at least as rigorous as PIB, especially with respect to contingent liabilities, the level of investment to be made and the terms of the concession agreements, as each of these have a significant bearing on the government,” the official added.

The Planning Commission’s appraisal unit prepares a detailed note that should form the basis for PPPAC’s approval. But the Plan panel feels that the suggestions of its unit are often overlooked by the committee, which takes a final view in case of inter-ministerial differences in any such project, which is then approved by Cabinet. State government officials directly involved in PPP projects, however, feel that the Planning Commission’s suggestions should not be binding on PPPAC.

“Project proponents should be the major drivers behind any PPP projects and PPPAC should take an independent view as it has been doing. However, the process should be speeded up to ensure that investments keep coming,” a senior Madhya Pradesh government official said.

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