Finance ministry invites comments on draft PPP policy

Finance ministry invites comments on draft PPP policy

New Delhi: The finance ministry on Tuesday released the draft national public-private partnership (PPP) policy aimed at creating a framework for implementing infrastructure projects across sectors. The draft has been placed on the ministry’s website inviting comments from stakeholders and the public.

Finance minister Pranab Mukherjee had announced in this year’s budget that the government will come up with a comprehensive policy that can be used by the Union and state governments to develop PPPs.

The national PPP policy will provide a framework for identifying, structuring, awarding and managing PPP projects, and standardize common processes so a consistent position is adopted in key issues.

The government will publish a defined set of PPP rules, including identification and procurement processes, monitoring of projects and management of contracts, the draft said.

To instil transparency, the government will insist on mandatory disclosures and fair practices in PPP projects, set up a dedicated dispute resolution mechanism to address issues related to bidding and award of PPP projects, and develop products such as pre-bid ratings for investors. The government will also look at setting up a Web-based marketplace to inform investors about PPP projects.

Last year, the government launched the national capacity building programme to enhance capacities of public functionaries in identifying, conceptualizing, structuring and managing PPPs.

The draft policy favours a process of market-based price discovery of natural resources in instances where PPP projects provide an implicit usage, ownership or exclusive right over underlying natural resources.

It also tries to address the issue of land acquisition by putting the onus of acquiring land in a time-bound manner on government agencies sponsoring a project, while ensuring that landowners’ rights are protected.

The government will spell out a long-term vision and plan document for each sector defining the role of public and private participation to make efficient use of assets and harness new investments.

“For each financial year, based on a predetermined and envisaged level of public services to be rendered, different agencies would set out an annual PPP plan which would identify a shelf of projects flowing from the overall vision and specify the extent of private investment for each project in the plan," the policy document says.

The policy advocates more active public participation at the project development phase for successful implementation.

“The finance ministry is taking the right steps towards making PPP happen, from creation (of an) infrastructure debt fund to initiating coming up with a policy outlining the basic principles involving PPP models," said Gokul Chaudhuri, partner at consulting firm BMR Associates. “The government should also come out with clear guidelines on ownership pattern of various PPP projects such as the ongoing Delhi-Mumbai industrial corridor, whose restructuring was announced recently."