Institutional monitoring of PPP projects made mandatory

Agencies, ministries implementing such projects will need to set up monitoring units to ensure private concessionaires follow Planning Commission guidelines

 
By Moyna
Published: Saturday 04 July 2015

It would now be mandatory for officers to be assigned for monitoring all public private partnership (PPP) projects like ports, highways and urban infrastructure. This follows the approval accorded by the Cabinet Committee on Infrastructure (CCI) to the Planning Commission's proposal for an institutional mechanism for monitoring PPP projects. The institutional mechanism is a part of the guidelines for PPP projects, which were framed by the Planning Commission in 2009.

Acknowledging the pit-falls of the PPP model, a government press release states that an institutional monitoring system is “all the more necessary as concessionaires will have an incentive to cut corners, whereas the criticism would be faced by government.”

[Highlights]

The CCI decision of July 12 comes close on the heels of numerous protests and enquiries into PPP projects, which include  expressways (Delhi-Gurgaon expressway, for instance) and municipal solid waste disposal projects in different parts of the country. In 2012, a number of solid waste management projects, all based on the PPP model, have either shut down—latest being the Ramky landfill in Bengaluru—or are being investigated, as the one in Varanasi.
 
Namita Mehrotra, director of the infrastructure unit in the Planning Commission, denied the Cabinet approval was linked to public protests or investigations. “These are not provoked. The guidelines have just taken time to evolve and get approval.” She explains that while the guidelines have been around for a couple of years they have now become mandatory for all Union government projects based on the PPP model.

Two-tier mechanism for monitoring


The Planning Commission has proposed the creation of a two-tier mechanism for monitoring the performance of PPP projects—a projects monitoring unit (PMU) at the project authority (implementing agency) level and a performance review unit (PRU) at the ministry or state government level. India has the maximum number of projects under the PPP model in the world; it has 432 Central projects and 535 state-level ones. The latest data on the Planning Commission website shows that as of March 2011, a total of Rs 3,77,590 crore was spent by the Union government on 349 projects which have either been completed, are under implementation or are proposed; Rs 720,597 crore was spent on 1,616 projects across states.
 
The Planning Commission and the 2009 guidelines for monitoring PPP projects set deadlines and assigns specific roles to PMUs and PRUs. For example, the PMU is to prepare a report to be submitted to PRU within 15 days of the close of the relevant month. The report is to cover compliance of conditions, adherence to time lines, assessment of performance, remedial measures and imposition of penalties. The PRU is to review the reports submitted by different PMUs and oversee or initiate action for rectifying defaults and lapses.

In addition to following the guidelines for the mechanism, the respective ministries will send a quarterly compliance report to the Planning Commission with a copy to the Ministry of Finance. The Planning Commission, in consultation with the Ministry of Finance, will prepare a summary of these reports along with the recommendations relating to further action and improvements, which would be placed before CCI once every quarter for the next two years. Based on the experience gained, necessary modifications would be made in the guidelines.

The government release states the Planning Commission “will have a central role in ensuring high quality monitoring. The Cabinet will have a chance to monitor every quarter.”

As per the Planning Commission, each implementing agency (the ministry, department or division under which the proposed PPP falls) is required to set up a monitoring unit which puts out all information of the project and ensures no rules are broken.

“After the CCI approval of July 12, the inspection and reporting of the PPP projects is mandatory at the central level and has been sent out as an advisory to all state governments,” says Mehrotra. She explains the need for these guidelines was felt because while the government is accountable to the public, it has little mechanism to ensure that the private parties do not flout any rules. “If there is problem with some PPP projects, the government would not even know about it and that is why we feel a proper mechanism is required to monitor these projects,” she adds.
 

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