Govt to address regulatory, financial issues in infra sector

Das said we will examine the suggestions in consultation with other departments, ministries and place them before the govt for an early decision

With private investment in infrastructure not forthcoming, the government on Monday promised stakeholders of resolving regulatory and financing issues in the sector, including those being promoted under the public-private partnership (PPP) mode.

Economic Affairs Secretary Shaktikanta Das held a meeting with infrastructure consultants, players and lenders, who have burnt their fingers in PPP. "We will examine the suggestions in consultation with other departments, ministries and place them before the government for an early decision," Das told reporters after a meeting with infrastructure sector players.

During the meeting, the industry representatives raised regulatory and financing issues, difficulties and certain issues which they have been encountering as well as capacity building.

Besides, issues concerning dispute resolution with regard to concession agreement for implementing PPP projects were also discussed.

For revitalising the PPP projects, the government has already set up a committee under former finance secretary Vijay Kelkar. "We are expecting the Kelkar Committee report to be submitted before the end of this month or maybe by the first week of November," Das said, adding that the meeting will complement the effort of the government in resolving the issues faced by the infrastructure sector. "Some of the recommendations, if accepted by the government, can be operationalised far quicker. But some of the recommendations may require a little more time. It will depend on the content of recommendation of the Kelkar panel," Das said.

Further discussion in this regard will take place between the Reserve Bank of India, banks and the department of financial services. This was the third such meeting with stakeholders after two rounds of meeting with economists and financial institutions.

The government has been trying to revive PPP after contractual issues, financial overhangs and delays in clearances stalled private investment in new projects. In May this year, it had set up the Kelkar Committee to review the PPP policy, including the variations in contents of contracts and difficulties experienced with particular variations, conditions, if any. Since PPP projects are bound to be long-term contracts lasting up to 30 years, tackling unexpected changes in conditions of operation is increasingly becoming difficult.

The committee will also analyse risks involved in PPP projects in different sectors and existing framework of sharing of such risks between the project developer and the government, thereby suggesting optimal risk-sharing mechanism.

Besides the ministry of finance, the Kelkar panel had carried out consultations with private developers of PPP projects. The panel is expected to suggest design modifications to the contractual arrangements of PPP and measure to improve capacity building in government for effective implementation of PPP projects. Besides Kelkar, other members of the committee include S B Nayar, CMD, IIFCL, and Shekhar Shah, director general, NCAER.