Government to formulate Public Private Partnership (PPP) Rules 2011

In the year the Department of Economic Affairs (DEA). Ministry of Finance, GoI had issued detailed guidelines for selection of consultants, developers for PPP projects and private Partners for disinvestment, in order to more transparency in the bidding process, these guidelines, in the year 2007 were adopted by GoUP with certain modifications. It was further clarified by DEA that financial support to PPP projects in infrastructure projects shall be granted under Viability Gap Funding (VGF) scheme subject to being in conformity to its guidelines.

Now DEA has issued a PPP (Preparation, Procurement and Management) Draft Rule 2011 for discussions to give more impetus on transparency and conformity defining duties and responsibilities at each stage of implementation of projects. These exhaustive rules on bidding process, monitoring of projects during and after implementation and on audit procedures, are proposed to be applicable on all projects undertaken by Government of India and projects of State Government or of its authorities or Corporations etc barring projects of few Ministries.

 Some of the very important highlights of draft PPP rules are as under :

1.    It involves qualitative and quantitative assessments to ascertain the Value for Money.

2.    The Contracting Authority has been made responsible for ensuring the interests of land owners under the extant of laws.

3.    In very complex PPP projects, a new stage known as Request for Technical Proposal between RFQ and RFP, and Competitive Dialogue system, have been incorporated for assessment technical qualification of developer and to establish project objectives.

4.    A provision of appointment of an Independent Monitor is made to ensure the transparency in bidding process. However, it may not be practically possible as in some states exiting Bid Evaluation and Consultant Evaluation Committee are being headed by fairly senior government officers of the state.

5.    It is proposed that bid security amount shall not be more than one percent of estimated project value.

6.    One applicant can submit only one application either individually or as a member of consortium

7.    Negotiations with the Bidder are strictly prohibited except in case of sole bid to get better terms.

8.    Suitable provision for exit strategy for continued service delivery projects, are required to be made in concession agreement.

9.    A data bank to deal with dissemination of information following in-principle approval, signing of the Concession Agreement, after Financial Close, during Construction and Operations Phase and following Termination of the Concession Agreement shall be created.

10.  An Approach to audit has been formulated and provision of constitution of Contract Management Team (CMT) and Empowered Review Cell (ERC) to deal with the activities related to Post Award Project and Contract Management, has been made with clearly defining their duties.

11.  A code of conduct for officers or employees of Contracting Authority shall be documented and implemented.

It is evident from the above, that implemented of these exhaustive rules would give new dimension to the PPP projects.

Kulbhushan Kapoor

Udyog Bandhu