Joint rating proposed for PPP projects

Credit rating agencies ICRA, CRISIL, Fitch Ratings and CARE will together develop a common rating methodology to rate public private partnership (PPP) projects at pre- and post-bid stages.

The agencies will prepare a draft paper within 15 days on the new rating system, which will then be circulated among stakeholders for their comments.

The finance ministry will subsequently hold an all -stakeholders' conference where the methodology will be further debated.

In a meeting today at the finance ministry, the rating agencies put forward their own versions of the rating system.

Ministry sources said there were hardly any differences in the rating systems proposed by the agencies because all of them had similar parameters of measurement.

The ministry had previously prepared a draft paper on project risk assessment for PPP projects with the help of rating agency CRISIL and had sought comments from various stakeholders, including states and the Planning Commission.

The Planning Commission has opposed the idea of involving outside agencies in the rating process because it feels this will invalidate the Public Private Partnership Appraisal Committee, which clears the projects.

It also fears that an external system may create more problems in case there is a difference of opinion between the government and the rating agencies. However, the finance ministry has decided to go ahead with its plan to rate such projects.

States are concerned that the project cost might go up with the additional cost of risk rating. However, the finance ministry feels rating will not increase the project cost substantially.

"The transparency that the rating system brings will add a lot of value to the project" a finance ministry source said.

The risk rating was supposed to be carried out at the pre-bid stage. Now, the ministry has added rating of special purpose vehicles at the post-bid stage to the rating system.