)
3P India, announced by Finance Minister Arun Jaitley in the Budget to facilitate the sluggish public-private partnership (PPP) projects, is likely to be a non-profit company on the lines of the National Skill Development Council (NSDC).
It will, however, have no regulatory power, but will look at a whole gamut of issues obstructing the growth of PPPs in India such as model concessionaire agreements, bidding process, dispute resolution mechanism, officials said.
However, policy-making will still be with the finance ministry and the new body will be more like a repository of knowledge, they added.
A senior finance ministry official said work on the institution has reached an advanced stage and a Cabinet note on formation of the new body is expected to be moved soon.
| INFRA IMPETUS |
|
"Once the Cabinet gives its approval, we (finance ministry) will draw the Article of Association (AoA) of 3P India. We want to move on this as fast as possible. 3P India's structure will be more like a private company to give it more flexibility to operate," the official said.
He said structure of the body will be on the lines of NSDC and Partnerships UK (PUK). The government of India has 49 per cent stake in NSDC, while the government of UK had the same equity holding in Partnerships UK, which ceased to exist now. Rest of the stake - 51 per cent - in both the entities is/was held by the private sector.
PUK was set up in UK in 2000 and had private sector procurement specialists such as corporate lawyers, investment bankers and consultants. It played a major role in boosting PPP projects in UK. It was dissolved in 2011, when a new body Infrastructure UK was formed.
Similarly, 3P India will be staffed with highly skilled professionals, who have deep knowledge of PPP projects, the official said.
Though he new body would not have any regulatory power, it will look into the issue of regulation. Besides, it will appraise the projects, look into finance structure and management of contracts. It will also address the issue of a dispute redressal mechanism, the official said.
Once 3P India is formed, targets will be set on a weekly basis and not monthly. This is so because appraisal and other works are currently done by the PPP Appraisal Cell in the finance ministry, which has just four consultants. These works are likely to be taken over by the new body. "Now, we want to have an institutional arrangement with professionals. We need someone who understands PPPs," the official said. 3P India, which will have sector and legal experts, will adopt best practices like risk evaluation in these projects, he said.
It will be ensured that there is no conflict of interest while getting the professionals for the new body, another official said.
Jaitley in his budget speech said that over 900 PPP projects are under various stages of development.
However, the PPP projects suffer from various pitfalls, including stiff contractual agreements, which would be addressed by the new body.
"...we have also seen the weaknesses of the PPP framework, the rigidities in contractual arrangements, the need to develop more nuanced and sophisticated models of contracting and develop quick dispute redressal mechanism," Jaitley said in his budget speech, while proposing the body.
Vinayak Chatterjee, chairman and managing director, Feedback Infrastructure, said 3P India is expected to undertake a host of activities which includes re-drafting the model concessionaire agreements (MCA) as and when needed, looking at the existing bidding structures, dispute resolution mechanisms, renegotiation of agreements and sharing of PPP experience across sectors.
"The whole bundle of tasks taken together will revive the PPP ecosystem in the country," he said.
The leading expert on infrastructure said 3P India could be an institution on the lines of a think-tank, which could have representation from regulators, private parties etc. "More importantly it should have a life of its own outside the purview of government tenure, so that even if governments change, the institution survives."
The official added that Rs 500 crore has been provided in the Budget for meeting the operational expenses of 3P India, which would have a business model of its own.
According to a World Bank report on private participation in infrastructure, India is the largest market for PPP in the developing world.
It alone accounted for over half of the total investments in new PPP projects in developing countries in 2011, when it implemented 43 projects which attracted total investment of $20 billion.
The concept of 3P India was first mooted some three-years back. However, at that time it could not take off due to economic slowdown. Some officials said, the idea could also not fructify due to stiff resistance from the then Planning Commission.
Critics of 3P India alleged that the new body can do little to revive PPPs and will be just another body of officials.
However, Chatterjee said growth of PPPs, which has nosedived in the last few years due to various reasons, will be rejuvenated by this measure.
PPPs in sectors after sector-- be it roads, ports etc--have shown significant fault lines over the years, he said.
"We need to learn from past mistakes and move in the right direction so that henceforth there are no bottlenecks," Chatterjee said.
Officials said the Planning Commission will give its views on the body once a formal cabinet note is moved.
