Two-tier structure to monitor PPP

The Union Cabinet approved the setting up of an institutional mechanism for effective monitoring of the contract performance of projects under the public-private partnership (PPP) mode to ensure timely completion.

As per the Cabinet decision on the Planning Commission’s proposal, the institutional mechanism for monitoring of PPP projects will have a two-tier scanning structure by way of a ‘Projects monitoring unit’ (PMU) and a ‘Performance review unit’ (PRU) in view of the fact that a number of infrastructural development projects are likely to be routed through the partnership mode for implementation.

Stressing on the need for such an approach, an official statement on the Cabinet decision said: “It has become necessary to adopt a well-defined institutional structure for overseeing contract performance effectively. This is all the more necessary as concessionaires will have an incentive to cut corners whereas the criticism would be faced by the government”.

To ensure timely completion of PPP projects, while the PMU will monitor their performance at the project authority level, the PRU will also oversee their implementation at the Ministry or state government level. Thereafter, as per the mechanism, the PMU will prepare a report and submit it to the PRU within 15 days of the close of each relevant month.

According to the statement, the PMU reports covering compliance of conditions, adherence to time lines, assessment of performance, remedial measures and imposition of penalties will be taken up for review by the PRU to oversee or initiate action for rectifying any defaults or lapses. Apart from adhering to these monitoring mechanism guidelines, the Ministries concerned will also have to submit a quarterly compliance report to the Planning Commission with a copy to the Union Finance Ministry.

On the basis of such compliance reports, the Commission, in consultation with the Finance Ministry, will prepare a summary of these inputs along with recommendations and place it before the Cabinet Committee on Infrastructure (CCI) once in each quarter for the next two years.

Based on the outcome and the experience gained in this regard, modifications would be made in the guidelines, if necessary. As of now, while the Planning Commission will have a major role in ensuring quality monitoring, the CIC will also be able to scan the progress of PPP projects every quarter.