The Cabinet Committee on
Infrastructure (CCI) approved a proposal from the Planning Commission to set up
an Institutional Mechanism for monitoring and enforcement of provisions in PPP
projects. With an increasing reliance
being placed on PPP projects across many wings of the government, it has become
necessary to adopt a well-defined institutional structure for overseeing
contract performance effectively. This
is all the more necessary as concessionaires will have an incentive to cut
corners whereas the criticism would be faced by government.
The Institutional
Framework requires project
authorities to create a two-tier mechanism for monitoring the performance of
PPP projects:
(i)
A PPP Projects Monitoring Unit (PMU) at
the project authority level
(ii)
A PPP Performance Review Unit (PRU) at
the Ministry or State Government level, as the case may be.
The PMU is to prepare a report to be submitted to PRU within 15 days of
the close of the relevant month. The
report is to cover compliance of conditions, adherence to time lines, assessment
of performance, remedial measures, imposition of penalties, etc. The PRU
is to review the reports submitted by the different PMUs and oversee or
initiate action for rectifying any defaults or lapses.
In addition to following the
guidelines for the mechanism, the respective
Ministries will send a quarterly compliance report to the Planning Commission
with a copy to the Ministry of Finance. Planning Commission, in consultation
with the Ministry of Finance, will prepare a summary of these reports along
with the recommendations relating to further action/improvements which would be
placed before CCI once every quarter for the next two years. Based on the
experience gained any necessary modifications would be made in the Guidelines.
This is an important governance
mechanism in an area which will see a lot of activity in future. It will ensure
good governance, accountability, efficiency and economy in spending. The
Planning Commission will have a central role in ensuring high quality
monitoring. The Cabinet will have a chance to monitor every quarter.
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RCJ/SC/SK/LM