Plan panel wants framework for all PPP projects to bring in more clarity

The Planning Commission wants all private-public-partnership projects (PPP) to come under a regulatory framework so that there is more transparency at various stages of implementation.

Gajendra Haldea, principal advisor (infrastructure) of the Planning Commission, said in most of cases, the bidding process involved in a PPP has little transparency and a viability gap funding done by the central or the state government is not required.

Haldea acted as a mentor for the concession agreement between the Andhra Pradesh government and a consortium led by the Satyam group for the 71-km metro project in Hyderabad costing Rs 12,410 crore. Here the state government will receive Rs 1,240 crore instead of making a viability gap funding.

Both the central and the Andhra governments were prepared to fork out 10% of the total project cost as viability gap funding.

Haldea told FE on the sidelines of the Eastern Infra Con 2008 organised by the Indian Chamber of Commerce here on Friday that almost in all the PPPs, private partners ask for viability gap funding or capital subsidies for projects, which are so called economically justified but commercially unviable with long gestation periods. The governments, for this purpose, have been leveraging scarce budgetary resources to address critical gaps in private sector financing. But the bid for the Hyderabad metro has shown that things can happen in a different way. ?If PPPs come under a regulatory framework, there is a possibility that viability gap funding won?t be needed for many of the projects,? Haldea said.

Citing the Dhabol project, Haldea said,? PPPs are often driven by private beneficiaries.?

On power sector reforms, Haldea said despite the Centre has introduced the Electricity Act of 2003 for complete reforms, most of the states have partially implemented it.

No states have implemented the open access system, and the government monopoly in power generation and distribution continues, leading to inefficiency.

In Kolkata, CESC is not exposed to competition and ?the government here has allowed a private sector monopoly,? Haldea said. ?If a private sector company enjoys monopoly, it becomes as good as a public sector one in terms of inefficiency,? Haldea said. India has a peak demand deficit of 13.8% and transmission and distribution (T&D) losses of 40%. This is happening owing to absence of competition, which is an effect of inadequate private sector investment in the power sector.