The Planning Commission and the finance ministry have locked horns over a proposed dispute-resolution mechanism for public-private-partnership (PPP) projects.
The Prime Minister's Office (PMO) had directed the Commission in May to draft a Bill for setting up an institutional mechanism to resolve public contract disputes that discouraged investments in the infrastructure sector.
The draft Bill sent by the Commission to PMO says the government will constitute a 'Tribunal for Public Contracts' for resolution of disputes in these projects. This tribunal, which will have the principal seat in New Delhi and benches in Chennai, Kolkata and Mumbai, according to the Bill, will have the power to attach properties, impose fines and even blacklist parties in PPP disputes.
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The finance ministry has, however, opposed the Bill. Senior ministry officials said the dispute-resolution mechanism should not be uniform across PPP projects, as each had a different character.
"The contracts in PPP projects, their mode of execution, etc, are different for different sectors. So, a uniform approach will not work," a senior official from the department of finance said.
The ministry, arguing the one-size-fits-all approach will not work, wants different arbitration processes for various sectors in PPP projects.
A key Planning Commission official directly involved in drafting of the Bill, on the other hand, contends that separate mechanisms for different PPP models is not a pragmatic proposition.
"In India, we have an arbitration panel, a Supreme Court, etc, to look into all kinds of cases. There is no question of one-size-fits-all approach; that is the system. How can you have separate arbitration processes for PPP in roads, ports, etc?" the official said.
Also, the finance ministry is of the view that there should be an independent regulator to monitor PPP projects, and not a dispute-resolution tribunal.
"Like the electricity sector, which has one of the best dispute-resolution mechanisms, there should be one for PPP projects," a senior finance ministry official said.
The Bill provides for a tribunal to deal with disputes in public contracts exceeding Rs 5 crore in value. It will have under its jurisdiction the contracts executed by the central government, state government, local or statutory authorities, or any corporation, society or trust owned and controlled by the government.
The matter is now expected to be settled at the cabinet meeting.
The Planning Commission, meanwhile, claimed it suitably modified the initial Bill after taking stakeholders' views. For instance, it kept consumer class-action lawsuits out of the Bill's purview.
"There was an opinion that consumer action suits in PPPs should not be made part of the dispute-resolution mechanism. We have accepted that," the official said.
A consumer class action is a lawsuit typically brought about by an individual or a group of individuals to seek damages or compensation for the common harm. In the case of PPP projects, these could have been from the users.
The government envisages an investment of $1 trillion in the country's infrastructure sectors -roads, telecom and power - during the 12th five-year plan period (2012-17), half the amount coming from the private sector.
DISPUTES GALORE
|758 projects: Currently being executed under the PPP model
|Rs 3.83 lakh crore: Total estimated cost of these projects
|Major hurdle: Disputes have been the key roadblocks in execution and led to poor response to new projects
|Hiccups on the road: Government's repeated invitations have failed to attract bids in many projects
|Ironing out: On being asked by PMO, the Planning Commission prepared a draft Bill on the dispute-resolution mechanism after consultations with stakeholders
|Modifications: The initial Bill was modified to exclude consumer class-action lawsuits
|Differences persist: The finance ministry does not agree with the Planning Commission's idea of a uniform approach for dispute settlement through a tribunal
