The government is expected to dismantle the finance ministry committee that approves the public-private-partnership projects and to handover that duty to Niti Aayog. The process will be speed up with the scrapping the Public Private Project Approval Committee (PPPAC).
The government has to improve the ease of doing business and the move follows the planned scrapping of the Foreign Investment Promotion Board (FIPB) as announced in the February 1 Budget. This is the part of efforts to ease overseas investment.
The cabinet secretary held the meeting of the committee of secretaries discussed the PPPAC proposal. The committee of secretaries had been formed with a mandate for finding ways of expediting approval for PPP projects.
One of the persons said, “It was discussed that sending projects to PPPAC for approval consumes a lot of time, which can be reduced substantially by making Niti Aayog the approval authority. However, a final decision has not been taken on it yet, as a lot of details need to be discussed.”
As per the current rules, PPP projects worth Rs 1,000 crore are sent to PPPAC and to the cabinet for final approval. The meeting will also debate on raising the limit so that ministries would have more than a role in approvals.
An official said, “It was also discussed that the cost limit of PPP projects should be increased from the current Rs 1,000 crore so that the respective ministry can clear more projects on its own, thus making the approval faster.”
The Department of Economic Affairs (DEA) created PPPAC in 2006 and it was responsible for the appraisal of PPP projects in the central sector.
It includes the secretaries of economic affairs, legal and expenditure affairs with the department sponsoring the project and the Niti Aayog CEO.
It expects to be some resistance to the move to scrap PPPAC. DEA officials said that they have gained an expertise in dealing with PPP projects as they were doing that for more than 10 years and the committee is the significant to appraise projects. It is sensible to make a NITI Aayog approval authority plan for PPPs, but there is also need to have precise guidelines in place.
A senior DEA official said, “A lot of departments want to skip scrutiny by PPPAC.”
The proposal is however expected to improve the project award process and will save the cabinet’s time. Nestor Consulting CEO, Sanjay Sethi said, “It is high time the government increased the limit of projects to be sent to cabinet for approval from Rs 1,000 crore as a large number of projects are now above that limit. The government should also look at reducing the number of approvals required after the project is awarded, that consumes a lot of time and energy of the companies involved in infrastructure projects.”
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