PAC faults govt for lack of precision in public private partnership agreements
29 April 2016
The Public Accounts Committee has found that the contractual agreements signed by various government departments with private parties in several public private partnership projects have failed in safeguarding public interest.
In two separate reports tabled in Parliament on Thursday, the PAC highlighted the problems at the GVK-controlled Chhatrapati Shivaji International Airport (CSIA) in Mumbai and the production sharing contracts with Reliance Industries for the Krishna-Godavari Basin block as instances where the centre has failed to ensure that public money and resources are safe.
The CSIA, which was handed over to Mumbai International Airport Ltd on 3 May 2006, had faced several problems in operationalisation and implementation the project.
The PAC has found several shortcomings in the joint venture model and implementation of the Operation, Management and Development Agreement (OMDA), and the State Support Agreement (SSA). The OMDA and the SSA did not specify any cost estimate for the project, the committee pointed out.
''The initial cost of the project was estimated at Rs5,826 crore in 2006, which was revised by MIAL in 2008, 2010 and finally to Rs12,380 crore in 2011, that is, an increase of more than 100 per cent of the original cost estimate,'' the report pointed out.
The PAC had cited similar issues in the case of Delhi International Airport Limited as well. The committee has urged the centre to be careful about such agreements as it involved national resources.
In a separate report on hydrocarbons production sharing contracts, the PAC said the ministry of petroleum and natural gas failed to quantify losses to the exchequer on the KG contract because of non-adherence of PSC provisions. The committee also questioned the ministry's failure in finding any ''affiliated transaction or fraud'' to invalidate the integrity of procurement.
It also pointed to the fact that in the absence of any quantification of the impact on government finances action cannot be taken against the contractor.
The PAC said the ministry has been vested with the resources of the country ''in fiduciary capacity and therefore has the inherent responsibility to ensure that they are exploited in the interests of the country''.
The report called for a robust monitoring mechanism within the existing PSC framework to ensure that a fully transparent and cost-effective process is adopted by the operator.