GS-3, Indian Economy, Pub admin 1, Uncategorized

Create 3P India, provide flexibility in PPP contracts

  1. A committee under Vijay Kelkar has suggested the revival of a defunct proposal to establish to support projects. It also called for an amendment to the Prevention of Act (PoCA) to clarify the difference between cases of graft and genuine errors in decision-making.
  2. It also recommended setting up of independent regulators for PPP projects in various sectors and a rational allocation of risks for various stakeholders, which can only come about after removal of the ‘one-size-fits-all’ approach to PPP Model Concession Agreements (MCAs).
  3. 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.
  4. “It is the Committee’s view that MCAs, for each sector, are reviewed to capture the interests of all participating stakeholders — users, project proponents, concessionaires, lenders and markets,”
  5. Finance minister Arun Jaitley had announced the setting up of 3PI in the 2014-15 Budget with a corpus of Rs 500 crore.
  6. For future PPP contracts, the panel has suggested that proper assessment will need to be carried out regarding the relative ease and efficiency of managing the risk by the entity concerned and that there should be ex-ante provisioning for a renegotiation framework in the bid document itself.
  7. The Committee recognises the need for a quick, equitable, efficient and enforceable dispute resolution mechanism for PPP projects.
  8. PPP structure should not be adopted for small projects. It also said there was a need to attract viable long-term investors and to explore options for sourcing long term capital at low cost.

 

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