FinMin, Plan panel differ on special entity for infrastructure PPP

The finance ministry and the Planning Commission are at loggerheads over a plan to form a special entity to take care of the burgeoning public-private partnerships (PPP) for infrastructure projects.

The infrastructure sector is estimated to need around $500 billion in the current Plan period (2007-12). Of this, the contribution by the private sector is expected to be around 30 per cent, or $155 billion.

While the Planning Commission wants a separate body within the government to look into all matters regarding PPP projects, the finance ministry wants the body to be housed outside the government.

"Creating another body within the government is like creating a new ministry or a public sector enterprise. This is something we do not favour," said a finance ministry official.

The Plan panel wants to hold a 40 per cent stake in the entity with the remaining 60 per cent being held by the ministries dealing with the sector. It wants that all sovereign and non-sovereign functions of all ministries regarding infrastructure, including the powers to clear PPP proposals, be transferred to this entity.

However, the finance ministry wants to emulate the structure of "Partnerships UK", an entity for PPP projects that is outside the British government set-up. Established in 2000, it is a joint venture between British Treasury and financial institutions like HSBC, Barclays and British Land.

The Treasury holds a 49 per cent stake. The body works with the government in the development of the PPP policy and contract standardisation, helps with project evaluation and implementation and supports the partnerships in difficulty. It also takes risk on the outcome of the development and procurement process.

North Block wants the government to hold a 51 per cent stake in the proposed entity and the private partners the rest. "The idea is that the entity help formulate model concession agreements, conduct specific research, undertake policy advocacy and information dissemination," said an official.