Public Private Partnership (PPP)
A PPP Project means a project based on a contract or concession agreement, between a Government or statutory entity on the one side and a private sector company on the other side, for delivering a service on payment of user charges. The rights and obligations of all stakeholders including the government, users and the concessionaire flow primarily out of the respective PPP contracts. Unlike private projects where prices are generally determined competitively and Government resources are not involved, PPP projects typically involve transfer of public assets, delegation of governmental authority for recovery of user charges, private control of monopolistic services and sharing of risks and contingent liabilities by the Government. The justification for promoting PPP lies in its potential to improve the quality of service at lower costs, besides attracting private capital to fund public projects.
For creating a transparent, fair and competitive environment, the Government of India has been relying increasingly on standardising the documents and processes for award and implementation of PPP projects. Based on international best practices, a number of Model Concession Agreements (MCAs) have been evolved for different sectors. The process of prequalification and selection of bidders has also been standardised through adoption of model documents for a two-stage selection comprising the Request for Qualification (RFQ) and Request for Proposals (RFP). These documents can be adapted for meeting the specific requirements of individual projects.
A poorly structured PPP contract can easily compromise user interests by recovery of higher charges and provision of low quality services. It can also compromise the public exchequer in the form of costlier or uncompetitive bids as well as subsequent claims for additional payments or compensation. The process of structuring PPPs is complex and it is, therefore, necessary to rely on experienced consultants for procuring financial, legal and technical advice in formulating project proposals and bid documents for award and implementation of PPP projects in an efficient, transparent and fair manner. Ministry of Finance, Government of India has notified the guidelines to be followed by all Ministries and Departments of the Central Government, all statutory entities under the control of Central Government and all Central Public Sector Undertakings for selection of technical, legal and financial consultants for PPP projects.