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5.3 Audit Mechanisms
5.3.1 To maintain transparency, equity and fairness in developing and implementing projects , the Government would continue to strengthen the governance processes and institutions that are accountable to the stakeholders. The financial management, accountability and audit obligations, to verify the robustness of the development, procurement processes adopted and functioning of the public sector entities would remain as per the applicable legislation.
5.3.2 The oversight would extend to the manner of selection of the private entity, procedures observed in releasing payments from time to time, review / monitoring of quality of service and Value for Money analysis, with the view to ensure adherence to key performance indicators enshrined in the contract. The oversight would also extend to ensure that the terms of contract have been adhered to in terms of ensuring condition precedents, VfM performance assessments, imposition of penalties for non-performance, reckoning of termination payments, etc. Any post award negotiation and / or contract modification would remain a critical area focus during the oversight process.
5.3.3 These provisions would not be applicable to the private sector entities (including the special purpose vehicles set up for provision of public assets and/ or related services), irrespective of whether any financial assistance (in the form of user charges, annuity, viability gap funding or any other form/ means) has been extended or not.
5.4 Regulatory Mechanisms
As provision of many public assets and/or related services has natural monopolistic characteristics, the same would be regulated to ensure that the interests of users and service providers are protected taking into consideration the affordability of the users and certainty of pricing and revenue stream to the private party. The regulation would be through independent (multi-sectoral, where applicable) regulators, wherever there is no sector specific regulator, regulation would be through contractual arrangements. Where the regulatory mechanism becomes operational subsequent to a PPP contract execution, Government commits to take cognizance of the contract provisions would prevail to minimize regulatory risk.
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