5.1 Institutional Framework for PPPs
5.1.1 A strong and well defined institutional structure is a cornerstone for the development of a sustainable PPP programme. In addition to governance and due diligence functions, the institutional framework nurtures and encourages new models and innovation and develops capacities to successfully discharge changing roles and responsibilities that PPPs require.
5.1.2 The Government has supported the creation of nodal agencies such as the PPP Cells at a State or sector level. The functions envisaged of a PPP nodal agency, such as a PPP Cell, are outlined below. The PPP Cells would be strengthened with appropriate resources and skilled manpower to achieve these roles.
i. Identify, conceptualize and create a shelf of projects and recommend approval of suitable projects for implementation on PPP route.
ii. Assist in preparing the pre-feasibility reports through consultants.
iii. Appoint / select consultants to develop the projects.
iv. Ensure rigorous adherence to managing effective and transparent tendering processes.
v. Create coordinated, efficient, machinery for PPPs whereby viable transactions are tendered to the market and the costs of each transaction are realizing economies of scale.
vi. Develop internal evaluation guidelines in consultation with the respective departments to evaluate and assess the projects.
vii. Act as the nodal agency for capacity building for PPP, through training and technical assistance, to increase the deal flow of eligible projects.
viii. Ensure dissemination to consumers, investors and other government entities on the benefits and procedures for PPP in a given sector.
ix. Inspect, visit, review and monitor PPP projects under implementation.
5.2 Decision-Making Process for PPP
5.2.1 In view of the initiatives by the Government of India to promote PPP projects and given the wide-ranging exposure that the Government could assume under a PPP project, the Government has established an appraisal mechanism for PPP projects. Hence, the Cabinet Committee on Economic Affairs of the Government has created the PPP Appraisal Committee (PPPAC), comprising of the following:
a. Secretary, Department of Economic Affairs (Chairman)
b. Secretary, Planning Commission
c. Secretary, Department of Expenditure;
d. Secretary, Department of Legal Affairs; and
e. Secretary of the Department sponsoring a project
5.2.2 Every PPP project at the central government level, even where no capital subsidy is required, is expected to obtain clearance from the PPPAC1. The intent of the clearance process is to ensure that the projects that are bid out are commercially robust, the provisions in the contract document safe guard user and public interests and the contingent liabilities of the Government are capped.
5.2.3 The PPPAC encourages the utilisation of standardized contractual documents, which lay down the standard terms relating to allocation of risks, contingent liabilities and guarantees as well as service quality and performance standards, and standardised bidding documents such as Model Request for Qualifications and Model Request for Proposals that have been notified.
5.2.4 The establishment of annual parameters and targets for the performance of the sectors, as well as decisions to enhance investments are taken by the Union Cabinet and its Committees.