Kelkar panel shows the way to revive PPP in infra projects.

A committee reviewing public-private partnership (PPP) in infrastructure has suggested the revival of a defunct proposal to establish 3P India to support PPP projects.

It has also called for a rational allocation of risks among various stakeholders in a project, and moving away from the one-size-fits-all approach to PPP model concession agreements (MCAs).

The panel, headed by former finance secretary Vijay Kelkar, recommended setting up independent regulators for PPP projects in various sectors and pushed for amendment to the Prevention of Corruption Act to clarify the difference between cases of graft and genuine errors in decision-making.

It added the government should encourage development of airports, ports and railways through PPP, by ensuring easier funding for projects with long gestation periods.

“PPPs are an important policy instrument that will enable India to compress time in its journey towards economic growth. A successful and growing stream of PPPs in infrastructure will go a long way in accelerating the country’s development process,” said the report, which was made public by the finance ministry recently.

“Every stakeholder, without exception, has strongly emphasised the urgent need for a dedicated institute for PPPs, as was announced in the previous budget. The committee strongly endorses the 3PI, which can function as a centre of excellence, enable research, and review and roll out activities to build capacity,” the panel said.

Finance Minister Arun Jaitley had announced the setting up of 3PI in his maiden budget for 2014-15 with a corpus of Rs 500 crore. The proposal remains on paper. For future PPP contracts, the panel suggested proper assessment of managing risk and that there should be a renegotiation framework in the bid document itself. “The adoption of the MCA has meant that project-specific risks are rarely addressed by project implementation authorities in this one-size-fits-all approach. A rational allocation of risks can only be undertaken in sector- and project-specific contexts,” the panel said in its report, which was submitted to Jaitley on November 19.

BS