Regulator to sort out Disputes in Road Projects
With the occurrence of disputes arising out of many Public-Private-Partnership (PPP) projects in the road sector, the secretary of the Department of Economic Affairs stressed on the need to appoint a regulator to look into such issues. Due to the fact that government officials do not have the capacity to intercede in PPP projects involving contracts between the government and private sector enterprises, spanning 20-30 years, the need for a regulator to act as an intermediary between both parties becomes paramount, especially in situations when there is a conflict of interest between both parties.
Planning Commission suggested Omnibus Bill:
A contradictory stand was taken by the Planning Commission with regards to having a road sector regulator appointed to look into issues with regards to PPP projects. Instead, it supported the implementation of an Omnibus Bill that would mention in detail methods for resolving disputes arising in PPP projects.
Govt woos Private sector players:
Private sector players were being encouraged by the government to undertake infrastructure projects through the PPP model. Bids were invited by the government in 2005 from the private sector to carry out road projects under the Build-Operate-Transfer (BOT) mode. Under this model, the private developer entrusted with the road project draws the design for the road, provides finance and builds it, provides maintenance for it and collects toll from users over an extended period, so as to recover the cost incurred in its construction. According to what was announced in the Finance Minister’s Budget speech this year, it was reported by the secretary of the Road Transport and Highways ministry that it was working on the proposal to have a regulator appointed to look into matters related to the functioning of PPP projects.
Advisory role for Regulator:
The role of the regulator would be more in an advisory capacity with regards to PPP projects. Some of the responsibilities that would be undertaken by the regulator include renegotiation of existing contracts, setting of service standards, project entry and exit options, tariff structuring and toll mechanism, and knowledge management, based on the project proposal under the consideration of the Road ministry. Besides these, the regulator will also have an adjudicatory role on dispute resolution for contracts, renegotiation for future contracts, and enforcement of contractual provisions. The detailed proposals for the regulator to be followed were officially spelled out by the Highways ministry
