Cabinet to soon clear oversight system for monitoring PPPs

Pushed by PM, against the backdrop of widespread breach of obligations and accountability

A system of oversight to monitor and enforce concessionaires’ compliance on public obligations in all public-private partnership (PPP) projects is to be cleared by the Cabinet shortly, at the instance of the Prime Minister’s Office (PMO).

It is reportedly Prime Minister Manmohan Singh’s determined insistence that has led to the fast-tracking of the proposal. It is likely to come before the Cabinet in the next 10 days, if not sooner. Of around 200 PPP projects in operation all over India in various infrastructure sectors, there has been just one instance, where a concessionaire has been charged with falling short of the standards set in the agreement with the government.

However, anecdotal evidence suggests hundreds of instances where concessionaires have shortchanged users of service and the government of revenue. In theory, it is nodal ministries that are supposed to exercise vigilance on the concessionaire’s contractual obligations. However, that nearly Rs 10 lakh crore of outlay in PPP projects across Union and state government projects has yielded just one case of alleged breach (the matter is in the high court) suggests there a problem in monitoring and oversight.

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• Reportedly PM Manmohan Singh's determined insistence has led to the fast-tracking of the proposal
• Proposal likely to come before the Cabinet in the next 10 days, if not sooner
• Around 200 PPP projects in operation all over India in various infrastructure sectors
• Anecdotal evidence suggests hundreds of instances where concessionaires have shortchanged users of service and the government of revenue

Last month, the Prime Minister addressed this issue at a meeting and a note has been prepared, now doing the rounds of various ministries. It outlines actions that can be defined as transgressions by concessionaires and visualises a system of penalisation.

For instance, if a concessionaire is found levying user charges outside the limits specified in the concession agreement; if public assets transferred to the concessionaire are misused; if there is leakage, diversion or misclassification of government revenues; if there is breach of contract. All these and recovery of penalties would be monitored in a chain of escalating responsibility, the Cabinet note visualises.

There has been indignation, for instance about increased user charges at airports. Similarly, the recently discovered structural faults in the metro rail line to Delhi’s airport has raised questions about which entity is responsible and who must pay to correct these.

The Airports Authority of India (AAI) is responsible for monitoring the standards at airports run under the PPP model. However, when the Delhi airport roof began leaking in 2009, at the start of the monsoon, leading to security scanners and other equipment being switched off or damaged, causing passengers grave inconvenience, Delhi International Airport Ltd, the concessionaire, only offered justifications. AAI denied all responsibility.

In 2009, two construction firms engaged in building a PPP bridge over the Chambal river in Kota were given a clean chit by the National Highways Authority of India although the bridge had collapsed, killing 30 people, mostly workers. At the time, NHAI said “some technical reasons" were behind the collapse. In 2006, a part of the Golden Quadrilateral highway near Kolkata collapsed when the sides of the retaining walls on the elevated road gave way, causing an outflow of the sand and fly ash used to build the highway. The black top split in two and sheared off. Two trucks travelling on the highway at that point overturned, as a result. This was also a PPP project.