Kelkar panel for easier funding for PPP projectshttps://indianexpress.com/article/business/business-others/kelkar-panel-for-easier-funding-for-ppp-projects/

Kelkar panel for easier funding for PPP projects

Seeks review of model concession agreements, raising of funds through zero coupon bonds.

A government-appointed committee on reviving public-private partnership (PPP) model has suggested ensuring easier funding for projects with long gestation period and “early action” to amend the Prevention of Corruption Act, 1988, to guard them against a “witch hunt”.

Listing out a slew of measures to revive PPP model, the committee, headed by Vijay Kelkar, former finance secretary, said that the government should encourage development of infrastructure sectors including airports, ports and railways under the PPP mode by ensuring easier funding. It also recommended review of model concession agreements, raising of funds through zero coupon bonds and setting up of independent regulators.

“The government may take early action to amend the Prevention of Corruption Act, 1988 which does not distinguish between genuine errors in decision-making and acts of corruption. Measures may be taken immediately to make only malafide action by public servants punishable, and not errors, and to guard against witch hunt against government officers and bureaucrats for decisions taken with bonafide intention,” the report made public on Monday said.

Further, emphasising on the need to strengthen governance, institutions and capacity, the committee said that the government should notify comprehensive guidelines on applicability and scope of government audit and access under the RTI to address concerns of stakeholders.

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“There have been concerns raised by all stakeholders (government and private sector alike) on the demand for developer books of account being subjected to government audit and for access under RTI and Article 12 of Constitution… To address this, the committee recommends that the government notify comprehensive guidelines… enable review only of government internal systems, and not that of SPVs, but SPVs would need to follow best practices in corporate governance systems,” the report said.

The report was submitted by Kelkar to finance minister Arun Jaitley last month. With regard to stalled PPP projects, the committee said it needs to be kick started. “There is an urgent need to evolve a suitable mechanism that evaluates and addresses actionable stress. Sector specific institutional frameworks should be developed to address these stalled infrastructure projects,” it said.

Seeking better identification and allocations of risks, the report said that the government should move the PPP model to the next level of maturity and sophistication and “foster trust between private sector and public sector partners in implementing the PPP projects.”

The other suggestions include restrictions on number of banks in a consortium, building up of risk assessment and appraisal capabilities by banks and specific RBI guidelines to lenders for encashment of bank guarantees.