PPP projects still out of hawk vision

May 14, 2013

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By SPS Pannu in New Delhi

THE government has been dragging its feet over the Comptroller and Auditor General’s ( CAG) proposal to bring public- private partnerships ( PPPs) under the ambit of the DPC Act, which gives the top auditor unfettered access to audit the finances of such projects.

According to sources, the proposal was first moved by CAG Vinod Rai in 2009.But despite repeated reminders, the finance ministry has not taken action.

Rai, who hangs up his boots on May 22 after an eventful career, will not have the satisfaction of realising one of his key objectives. According to sources, the embarrassment that the United Progressive Alliance government had to face after the CAG’s audit teams blew the lid off mega scams in the telecom sector, the allocation of coal blocks and the Commonwealth Games may be responsible for the go- slow attitude on the issue.

Sources disclose that for the record, the government has maintained that the states are also being consulted on the issue and response is still awaited from some of them.

The government had itself referred the privatisation of the Delhi Airport under the PPP mode to the CAG, which discovered that private operator GMR had managed to get hold a huge tract of prime land in the Capital for commercial use with an insignificant investment. CAG’s report had also exposed that GMR had not being paying the Airports Authority of India the full share of revenue that it had committed itself in the contract.

Similarly, the audit of the eastern offshore KG Basin gas fields operated by Reliance Industries Ltd had revealed major irregularities in contracts given out by the private company. This had inflated the cost of development of the gas fields and adversely impacted the government’s share of the revenue.

A senior officer of the Indian Audit and Accounts Service said, “ This ground experience clearly shows that there is a need to audit PPP projects in order to ensure transparency in the running these ventures.” Interestingly, the Prime Minister while addressing the Accountants General Conference as far back as 2008 had himself stated, “ Public private partnership projects are becoming increasingly common in key infrastructure sectors of transport, power, urban infrastructure, tourism and Railways. Audit needs new skills to evaluate these complex arrangements.” A senior official said that in order to meet this objective, a new set of guidelines for audit of PPP projects which at once reflects the best practices world over and yet is rooted in our experience of auditing government operations over the years has already been drawn up by the CAG. “ However, the government needs to amend the DPC Act so that PPP projects are formally brought under its ambit,” he added.

Rai had in his note to the government stated that PPPs, while bringing in private capital and experience, also involve transfer of valuable public assets as well as foregoing future revenue in the form of concessions. To ensure that such arrangements always enjoy high credibility in the public eye, due diligence, transparency, objectivity and probity of the entire decision making process are all paramount if these arrangements are to succeed and continue for future projects.

The rationale of the exercise is that the role of public auditors becomes critical in assessing whether such arrangements are truly in public interest and are also fair and balanced in sharing of risks as well as rewards.

PROPOSAL ON THE BACKBURNER

CAG Vinod Rai had proposed to bring PPP projects under the ambit of the DPC Act in 2009

The Act gives the top auditor unfettered access to audit the finances of such schemes

The government needs to amend the DPC Act so that PPP projects are formally brought under its ambit

Rai had said PPPs bring in private capital and experience but also involve transfer of valuable public assets as well as foregoing future revenue as concessions

The rationale of the exercise is that the role of public auditors becomes critical in assessing whether such arrangements are truly in public interest

Source-http://epaper.mailtoday.in