The Planning Commission has recommended that the private company in 50:50 joint sector infrastructure projects should be selected through competitive bidding.
The commission says that it does not subscribe to the existing system were such joint ventures are formed through closed-door negotiations and are not transparent.
The panel has also proposed that in case where the produce of these joint ventures are to be purchased by the public sector partner, the procurement should again be based on competitive bidding.
The proposal is currently under the consideration of the Committee of Secretaries, which will submit its final guidelines shortly after holding consultations with various departments and ministries.
A senior government source said, “Several cases have come to the notice of the government where such joint ventures are projected as a public sector undertaking, while the private partner calls the shots at will. So the proposals mooted by the Planning Commission would ensure that these joint ventures do not function contrary to public policy”.
The Planning Commission’s latest move is directed to bring in more accountability and avoid any conflict of interest since the grantor of the concession is also a partner in such joint venture projects.
For instance, Road Infrastructure Development Company of Rajasthan Ltd (RIDCOR), a 50:50 JV between IL&FS and the Rajasthan government, was set up to improve and maintain over 1,000 km of roads within Rajasthan. Such JVs have mushroomed across sectors in recent times.
The Planning Commission has also observed that if in such a joint venture the share of public sector is 50 per cent or less, then it is considered a private entity and would, therefore, not be accountable to the government, the public accounts committee and the Comptroller and Auditor General.
Even the government rules relating to procurement and expenditure would not apply to such a joint venture.
In such cases, where the joint venture company produces goods or services that are to be purchased by the public sector partner, there is always a chance of the private partner taking undue advantage of it.
