Transparency pact: heat on power PSUs to sign deal

Transparency pact: heat on power PSUs to sign deal
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First Published: Fri, Jul 25 2008. 08 36 AM IST

Investment motive: The 11th Plan aims to add 78,577MW in capacity, which will require an investment of about Rs10.31 trillion. The power ministry hopes PSUs signing the integrity pact will boost inves
Investment motive: The 11th Plan aims to add 78,577MW in capacity, which will require an investment of about Rs10.31 trillion. The power ministry hopes PSUs signing the integrity pact will boost inves
Updated: Fri, Jul 25 2008. 08 36 AM IST
New Delhi: Ten Indian government-owned power firms that have resisted a directive to sign an “integrity pact” with Transparency International India (TII), the local chapter of a global non-profit that tries to combat corruption, have now been given three months to do so.
Investment motive: The 11th Plan aims to add 78,577MW in capacity, which will require an investment of about Rs10.31 trillion. The power ministry hopes PSUs signing the integrity pact will boost investments. Photograph: Harikrishna Katragadda / Mint
Signing the pact means that the companies have to guarantee transparency in their public procurement deals. The pact, which would benefit the public sector undertakings (PSUs) when they bid for international projects, was launched by Transparency International (TI) in the 1990s and has been implemented in several countries and in large-scale infrastructure projects.
The Central Vigilance Commission (CVC), a government oversight body that had previously recommended all government-owned companies sign the integrity pact with TII, had recently put a few power sector undertakings under the scanner following the awarding of some big ticket projects.
In a letter to the companies, which include Bharat Heavy Electricals Ltd (Bhel), Jairam Ramesh, minister of state for power and commerce, wrote: “In the meeting with CVC (central vigilance commissioner) and his colleagues on 2 June, the issue of power sector PSUs entering into an integrity pact had come up. I hope this is being followed up by each of the PSUs and we will have the pacts in the next three months at most. I am struck by the fact that not one power sector PSU is in the list of 24 PSUs that have already signed such integrity pacts.”
The power ministry wants the companies to sign the pact immediately since it envisages a big step-up in investments. The 11th Plan (2007-12) has set a target of adding 78,577MW of capacity, requiring at current estimates some Rs10.31 trillion in investments.
“We should make every effort to sign these pacts at the earliest. I have spoken to most of the chiefs at the PSUs and they feel that it is a good thing to do. The exercise is on,” Ramesh said.
Other than Bhel, the power companies that did not sign the pact were NTPC Ltd, Damodar Valley Corp., Rural Electrification Corp. Ltd, Power Finance Corp. Ltd (PFC), Power Grid Corp. of India Ltd, North Eastern Electric Power Corp. Ltd, Tehri Hydro Development Corp. Ltd, Satluj Jal Vidyut Nigam Ltd, NHPC Ltd and Bhakra Beas Management Board.
CVC’s advisory order of 4 December was issued to ensure transparency in public procurement, after which PSUs such as Oil and Natural Gas Corp. Ltd, Rashtriya Ispat Nigam Ltd, Hindustan Petroleum Corp. Ltd, GAIL (India) Ltd and Coal India Ltd signed integrity pacts with TII.
“Signing integrity pacts makes all procurements transparent, and avoids kickbacks and corruption. These pacts makes business transactions healthier and it has been observed internationally that the company’s bottom line improves after signing it,” said TII chairman R.H. Tahiliani.
According to CVC, the pact is a vigilance tool and “envisages an agreement between the prospective vendors, or bidders and the buyer committing the officials of both the parties, not to exercise any corrupt influence on any aspect of the contract.”
NTPC chairman and managing director R.S. Sharma said, “We are taking the proposal to the board and will be signing the integrity pact shortly.”
PFC in an email response said, “In PFC, the integrity pact is already in place. However, for effective implementation of the pact, an independent monitor is to be appointed with the approval of CVC. This is under process.”
Not everyone is convinced that signing the pact would make a huge difference. “The integrity pact does not create any new legal mechanism by which the offenders can be prosecuted. Therefore, the real deterrent will be if only the existing vigilance agencies start implementing the existing anti-corruption laws effectively,” said Arvind Kejriwal, a right to information activist and head of Parivartan India.
To read the full text of the integrity pact, click here
To read the full text of the CVC order, click here
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First Published: Fri, Jul 25 2008. 08 36 AM IST