Action on Kelkar committee's report on PPP projects soon: Centre

Over past few years, PPP projects which were doing well for some time have run into various kinds of problems

The government today said it will soon take action on the recommendations of the Kelkar committee on Public Private Partnership (PPP) reforms. The committee submitted its report to the finance ministry today.

"The committee has held detailed deliberation with various stakeholders and other experts. We will go through the report and the government will take decisions on the recommendations as early as possible," revenue secretary at the Finance Ministry Shaktikanta Das told reporters.

He added over the last few years, PPP projects which were doing well for some time have run into various kinds of problems. "There were problems relating to contractual issues, finance issues, capacity issues and implementation difficulties. The committee was requested to look into all these aspects," he said.

The government has been trying to revive PPP projects after contractual issues, financial overhang and delays in clearances have stalled private investment in new projects. In May this year, it had set up a committee under Vijay Kelkar, former finance secretary, to review the PPP policy, including the variations in contents of contracts and difficulties experienced with particular conditions.

Since PPP projects are bound to long-term contracts lasting up to 30 years, tackling unexpected changes in conditions of operation is increasingly becoming difficult. The committee was asked to analyse risks involved in PPP projects in different sectors and existing framework of sharing of such risks between the project developer and the government, thereby suggesting optimal risk sharing mechanism.

Besides the ministry of finance, the Kelkar committee had also carried out consultations with the private developers of PPP projects. The committee was expected to suggest design modifications to the contractual arrangements of the PPP and measure to improve capacity building in government for effective implementation of the PPP projects.

Besides Kelkar, other members of committee include SB Nayar, chairman and managing director, IIFCL and Shekhar Shah, director general, NCAER.

The government had envisaged half of $1 trillion investment in infrastructure sector to come from the private sector during the 12th Plan period ending March 2017. According to an estimate of the Department of Economic Affairs, projects worth Rs 704,527 crore in different stages of implementation have been taken up through the PPP mode across the country.