The PPPP model with the effective oversight of constitutionally mandated national watch dogs like the Central Information and Vigilance Commissions and subjected to concurrent audit by the CAs and CAG can certainly help mitigate much of the shortcomings
The immediate post-independence era saw the rise and fall of the commanding heights of public sector primarily because of the lack of big ticket private sector investments for projects with long gestation periods in remote backward areas like Koraput, Rourkela, Bhilai and Digboi et al in the immediate post-independence era. The Soviet-styled Planning Commission chaired by then Prime Minister Jawaharlal Nehru committed public funds for large scale plants in the initial years of the country’s initial Five Year Plans.
Later on the private sector incentivised by the union and state government tax breaks and other concessions like quick land acquisitions, exemptions or holidays for income, sales tax and excise, subsidised water and power has came into its own. Thus enthused, the private sector to spread its wings still wider and moved all over the country, but essentially around the metro areas.
The funds requirements of both the public and private sectors still remain insatiable. They certainly cannot come out exclusively either from only the state exchequer or private individuals or corporate equity and debt investments. There is need for both to chip in together. The PPP puts in its appearance at this point in time.
With the needs of time and the changing circumstances, the government raised funds by issuing bonds to the investing public at large. The post liberalization-era brought in the continuing disinvestment process with the state gradually off-loading its holdings in public sector units (PSUs) selectively.
Many of the PSU Navratnas are today’s sizzling Sensex toppers sidelining the private sector giants. I for one firmly believe that the government should consider allotting the disinvested shares only and exclusively to resident Indian nationals. There is a precedent in the SEBI practice for reserving a quota for retail investors.
At the same time the private sector also has been collecting funds. It is a fact that governmental development finance institutions, public sector institutions, banks and LIC/GIC have been providing large funds by investing in and also providing advances for working capital as well as term loans. Now the Indian investor public has opportunities for equity participation in PSUs via listed shares. The India Inc too has large equity investments from governmental institutions like LIC and GIC. Undoubtedly the great deal of cross holding and investment of both the public as well as private individuals and entities simply cannot be wished away or simply ignored for all practical purposes.
Success Stories of peaceful co-existence
There is no doubting the success of the private sector participation in telecom and power where both the private and public sectors independently operate and co-exist in perfect harmony. India’s tele-density has attained 80% of the population primarily because of its private players while BSNL and MTNL continue to operate successfully alongside too. We have IOC, Oil India, ONGC, BPCL and HPCL co-exist peacefully with private oil giants.
The private sector accounts for over half the power generation capacity added in the last two years. The record of transmission & distribution (T&D) losses of the state-owned electricity boards, to say the least, is dismal because of their own gross inefficiencies. The massive July 2012 power outages hitting the entire north, east and north-east speaks for itself.
Surface transport—metro railways
But it has been far from inspiring in the case of metro railways and airports where they face troubled existence culminating in ‘temporary’ suspension of services. Though the Kolkata and Delhi metros have done well, those of Bengaluru and Mumbai are still undergoing teething troubles. The Hyderabad Metro construction has just begun under a new promoter, four long years after it started. The move to handover the Chennai airport to private firms just after the Airport Authority of India expended over Rs2,100 crore on completing its revamp is being questioned. The other international airports across the country have had to hike user fees to defray the extremely high expenditure in modernisation making them rather pricey.
Transportation essentially in water
The record of public-private partnership (PPP) has been a mixed bag in highway sector. Nevertheless, there is an urgent need to effectively utilise inland waterways for transportation under the PPP model as it is a proven inexpensive and efficient mode of transport. While neighbouring Bangladesh transports 30% of its goods, Germany 20%, the US roughly 14% and China have demonstrated its success, India with a navigable length of 14,500km, only a third, is being used by mechanised vessels making it just 0.15% domestic surface and coastal transport. Though there is a tremendous potential estimated by the National Waterways—even shifting just 1 billion tonne/km out of Ganga’s 50 billion tonne/km would reduce fuel cost by Rs25 crore and transportation costs by Rs45 crore to reduce pressure on rail and road as bulk carriers. There is an urgent need to fast track the Varanasi—Haldia stretch of the Ganga in Bengal, the Brahmaputra in Assam to transport coal, food grains and fertilizers and promote tourism in the inland stretch in Kerala and Goa. Inland waterway transportation can enhance tremendous fuel efficiencies; it is the most eco-friendly and cost effective mode of transporting over-dimensional hazardous and bulk cargoes.
There is a strong case to kick-start greater PPP in all sectors of the economy particularly in infrastructure projects involving large positive externalities or where capital expenditure costs take longer to recoup. It is beyond any private sector operator investing on its own. The metro rail network not only enables people to travel, it also helps reduce congestion on roads and leads to lesser pollution and deaths due to accidents all of which cannot be quantified or priced. This holds true even for rural roads and irrigation that have natural public good factor that are positive externality-creation characteristics making them less suited for execution by the private sector alone thus making substantial public sector and/or joint sector/PPP investment inevitable.
The success story of the multi-specialty hospital-cum-retirement home for senior citizens-orphanage Matru Chhaya, at Bengaluru run by the Canara Bank sponsored trust is a classic case of the good of PPP in action.
Need to add the fourth ‘P’ to PPP
The ideal situation for the success of the PPP-P – the fourth ‘P’ added for People; this means oversight by dedicated individuals, professionals, retired experts and civil society groups to bring in an ideal match with the public sector or local bodies like municipal corporations who are found to be sitting on extensive real estate and premises, infrastructure like roads, empty building premises and facilities which they have already spent crores on creation over the years, on the one hand and the expert administrative and managerial capabilities of professional manager from the private sector by way of a dedicated band of both public and private sector managers chipping in with their talents.
Vast scope for putting to use large stretches of idle public lands
Over the years the public sector attaining near monopoly market conditions essentially in LIC, railways, mining, telephones, airports, dockyards, army cantonment boards have gotten mired in massive inefficiencies, indulging in corrupt practices, subjected to political pulls and pressures more particularly in the matters of procurement and personnel appointments. The Hindu Business Line reports of a new six-storey building on 10.75 acres of prime government land in New Delhi’s tony Maharani Bagh lying vacant for four years as the recent CAG reports “lack of due diligence” leading to a badly drafted PPP agreement.
PPP success is essentially personality driven
The success of joint sector entities like the Delhi Metro and Konkan Railways are attributable more to the incorruptible personalities of veterans heading them like Mr Sridharan and B Rajaram, respectively that kept them out of the suffocating conditions suffered by the PSUs to effectively deliver quality systems on schedule and bring in homegrown innovations like the Konkan Railway’s Anti-Collision Device. Dr Varghese Kurien and the Amul success story is the best case of grassroots PPPP!
Private sector has nothing great to crow about
All these and related infrastructural facilities can be put to effective use as public stake/contribution/equity participation with the people and private sector piping in with their superior intellectual and managerial talents in addition to agreed financial stakes. Not that everything is gung-ho with the capitalistic private sector. The financial meltdown that began in the US in 2008 has bared the chinks in the armour of the so-called free market economics which are now found to be wanting in everything but truly free coupled with regulatory failures all over. The post-IPO insider trading, siphoning funds by over-invoiced procurements, ghost employees a la Satyam, dubious transfer pricing for imports, questionable accounting practices are some of the most common transgressions practiced by the unscrupulous private sector.
At the same time public property and premises should be adequately safeguarded by taking care to see that they do not fall victim to scams. This was curbed to a great extent by Shailesh Gandhi, when he was a Central Information Commissioner.
The PPPP model with the effective oversight of constitution mandated national watch dogs like the Central Information and Vigilance Commissions and subjected to concurrent audit by the CAs and Comptroller & Auditor General (CAG) can certainly help mitigate much of the shortcomings. The audit by independent statutory auditors also overseen by the CAG makes for an effective double check. At the same time it should be ensured to safeguard the public property and premises by taking care to see that they do not under any circumstances fall victim to scams. This was curbed to a great extent by Mr Gandhi when he was a Central Information Commissioner.
In October 2011, Moneylife Foundation in their suggestions and comments on the National PPP Policy made a Submission to the Ministry of Finance (MoF) calling that the entire PPP process should be placed on the website, the assets of the PPP should be held in the name of people/project, ensuring a time frame for holding and revenue sharing on BOT, open to RTI information scrutiny and CA/CAG audit, explicitly defined issues of land acquisition, toll gathering, user charges with built-in escalation clauses, criteria for recovery of costs, overheads and operating margins, minimal collection of cash through smart and effective audit trails.
A paper by the IIM-B Public Policy Programme has rightly laments most of our states do not have in place effective mechanisms to deal with the complexities of PPP projects more particularly on project-level governance issues and approach to contain deficiencies. It makes a first ever comparative assessment of the clarity and capacity of each state to plan and oversee PPPs, the comprehensiveness of policy framework and guidelines, their numbers and values, foreign and public investments/funding, political stability and business climate. This study assumes significance in the context of plans to invest over $1 trillion over the next five years to bridge the infrastructure gap—the Planning Commission projects that a major chunk, as much as 48%, will come from the private participants in PPP projects.
Only last week the Mumbai Municipal Corporation has approved the proposal to hand over management and administration of their primary schools running from their vast premises across the city to private sector. It is hoped that the drop-out rates will be brought down by better school management. This is a simple case of making available idle infrastructural facilities of this space-starved metro to conduct better educational models.
(Nagesh Kini is a Mumbai-based chartered accountant turned activist.)
The Central Information Commission and DoPT have put detailed guidelines on suo motu disclosure by public authorities, but most PIOs continue to be ignorant or to feign ignorance about Section 4 of the RTI Act
On Tuesday, I visited the Food Supply Office of the Pune district Collectorate to conduct an inspection of files under Section 4 of the Right to Information (RTI) Act. I was seeking information about the quantity of supply of wheat, rice, sugar and kerosene to ration shopkeepers under the public distribution system (PDS) in one of the six zones in Pune that the supply system has been demarcated into.
Public information officer (PIO) of the B Zone of the Food Supply Office was taken completely by surprise. She said she was unaware of anything called Section 4 under which a citizen can inspect files in the office. She said she is just 18 months since she is a PIO to which I said it’s too long a time and she should have studied the RTI Act by now. She nervously said that she had only heard of a RTI application that needs to be submitted by the citizen after which she gets a certain amount of days to reply. She frantically tried calling her seniors but could not get through to them.
Despite explaining to her the Section 4 and that, the information I am asking for comes under Section 4—sub sections 1, 12 and 13, she pleaded to be given just one day before she could provide me the information.
Seeing her nervousness, I relented and would be going back to her again on Wednesday, but the point is, most of the PIOs seem to hardly aware of Section 4 of the RTI Act. I have had similar experiences in Maharashtra State Road Development Corp (MSRDC), when I went to seek information under Section 4 for Pune-Mumbai expressway issue. Same thing happened at the office of Secretary, Environment, in Mantralaya, while seeking information on the Dow Chemical’s issue. Though ultimately they relented and allowed me to see the documents, the fact is, the government seems to deliberately keep the PIOs ignorant or the PIOs find it convenient to dilly-dally so that they do not get into trouble with their seniors.
As per the latest annual report of Maharashtra’s State Information Commission, 80% of PIOs and Appellate Authorities (AAs) do not know the basics of the RTI Act. This is despite the fact that YASHADA, the public administration development institute of the state government, has so far trained over 70,000 PIOs and AAs.
Department of Personnel & Training (DoPT), which has demanded strict implementation of Section 4 of the RTI Act from all public authorities, observed in its memo of 15 April 2013 that: “Since the promulgation of the Act in 2005, large amount of information relating to functioning of the government is being put in public domain. However, the quality and quantity of proactive disclosure is not up to the desired level. It was felt that the weak implementation of the Section 4 of the RTI Act is partly due to the fact that certain provisions of this Section have not been fully detailed and, in case of certain other provisions there is need for laying down detailed guidelines. Further, there is need to set up a compliance mechanism to ensure that requirements under section 4 of the RTI Act are met.’’
This was a sequel to the recommendations made by a ‘Task Force’ involving civil society, which the government had appointed, to strengthen the RTI Act.
Some of the guidelines for implementation are given below, which are still ignored by most of the public authorities (for full details go to http://cic.gov.in/ ). The information which is mandatory to be put under the public domain includes grants, concessions, procurement, public-private-partnerships, official tours, transfer policies, RTI applications. Citizen Charter and use of digital technology to put up information:
Information related to procurement
Information relating to procurement made by Public Authorities including publication of notice/tender enquiries, corrigenda thereon, and details of bid awards detailing the name of the supplier of goods/services being procured or the works contracts entered or any such combination of these and the rate and total amount at which such procurement or works contract is to be done should be disclosed.
Public private partnerships
If Public services are proposed to be provided through a Public Private Partnership (PPP), all information relating to the PPPs must be disclosed in the public domain by the Public Authority entering into the PPP contract/concession agreement. This may include details of the Special Purpose Vehicle (SPV), if any set up, detailed project reports, concession agreements, operation and maintenance manuals and other documents generated as part of the implementation of the PPP project.
Transfer policy and transfer orders
Transfer policy for different grades/cadres of employees serving in Public Authority should be proactively disclosed. All transfer orders should be publicized through the website or in any other manner listed in Section 4(4) of the Act.
All Public Authorities shall proactively disclose RTI applications and appeals received and their responses, on the websites maintained by Public Authorities with search facility based on key words. RTI applications and appeals received and their responses relating to the personal information of an individual may not be disclosed, as they do not serve any public interest
CAG & PAC
Public Authorities may proactively disclose the CAG & PAC paras and the Action Taken Reports (ATRs) only after these have been laid on the table of both the houses of the Parliament.
Citizens Charter prepared by the ministry/department, as part of the Result Framework Document of the department/organization should be proactively disclosed and six-monthly report on the performance against the benchmarks set in Citizens Charter should also be displayed on the website of public authorities.
Discretionary and non-discretionary grants
All discretionary/ non-discretionary grants/ allocations to state governments/ NGOs/ other institutions by ministry/department should be placed on the website of the ministry/department concerned. Annual accounts of all legal entities who are provided grants by public authorities should be made available through publication, directly or indirectly on the public authority’s website.
Foreign tours of PM/Ministers
Public authorities may proactively disclose the details of foreign and domestic official tours undertaken by the Minister(s) and officials of the rank of joint secretary to the Government of India and above and Heads of Departments, since 1st January, 2012. The disclosures may be updated once every quarter. Information to be disclosed proactively may contain nature of the official tour, places visited, the period, number of people included in the official delegation and total cost of such travel undertaken.
Guidelines for digital publication of proactive disclosure under Section 4
Section 4 lays down that information should be provided through many mediums depending upon the level of the public authority and the recipient of information (for example, in case of panchayat, wall painting may be more effective means of dissemination of information), and that more and more proactive disclosure would gradually be made through Internet. There is need for more clear guidelines for web-based publication of information for disclosure.
Guidelines for certain clauses of Section 4(1)(b) to make disclosure more effective
The elements of information listed in the various sub-clauses of Section 4(1)(b) must be disclosed in an integrated manner. For example, the functions and responsibilities of a public authority cannot be understood in isolation from the powers and functions of its employees, the norms that inform its decision making processes and the rules, instructions and manuals that are used in the discharge of its functions. Description of one element presupposes the existence of another. So every public authority must endeavour to integrate the information mentioned in these sub-clauses while preparing voluntary disclosure materials.
Annual reports to parliament/legislatures
Government has issued directions to all ministries/departments to include a chapter on RTI Act in their annual reports submitted to the parliament. Details about compliance with proactive disclosure guidelines should mandatorily be included in the relevant chapter in annual report of ministry/department.
So, who’s going to ensure that all the guidelines have been met? Citizens should lodge complaints with their respective information commissioners; head of public authorities should monitor their PIOs and AAs and; information commissioners should suo motu issue orders at regular intervals to public authorities. If each one works towards it, there is hope.
(Vinita Deshmukh is the consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”)
Cairn has recently approached the government seeking permission to a swap arrangement with Indian Oil Co whose refineries are in a position to use low sulphur crude
After acquiring the Rajasthan block from Shell in 2002, Cairn made the first oil discovery in 2004, when ONGC came in as a partner with 30% stake. Now, Cairn produces about 180,000 barrels a day (bpd) and has plans to reach 200/215,000 bpd after receiving some clearances from the government which are awaited.
Once regulatory approvals are received and additional investments made, 35% of India's crude requirement will be met from Cairn-ONGC fields. This will take the production—it is envisaged—to 300,000 bpd and save a lot in foreign exchange outgo!
It may be recalled that the petroleum ministry announced recently that they are already working on a revised and comprehensive policy on NELP (New Exploration Licensing Policy). This is awaited with great interest, and it is hoped that they would take the necessary precaution to use the rupee as the base pricing factor rather than the dollar. For the sake of drawing a parallel to international prices, they may use this, but they will fix the parity rate to avoid any dispute later.
Cairn has recently approached the government that their current product sharing contract (PSC), which is valid till 2020, be extended indefinitely, meaning that this should really be allowed to last as long as the economic life of the well. Rightly so! This freedom will enable Cairn, and for that matter all others in similar situation, to plan their investment and expansion policy more realistically. So far, Cairn has invested about $3.8 billion in their fields for development.
Earlier, Cairn had made a representation to the government that the areas they had surrendered in Barmer district be reinstated to them, instead of inviting fresh bids to do so, which is the normal practice. Since no formal advice has been received from the government on this score; a favourable decision would facilitate Cairn's future plans in the area.
In support of their request, Cairn has stated that the economic life of the block is entirely dependent upon the volume produced and the price obtained.
When the revised NELP is announced, it is expected to cover all the contracts—both the old and the new—so that everyone is treated equally.
Due to the shortage and the resultant need to import crude, Indian government does not permit export of oil and gas. In case of Cairn, the oil produced from Barmer, Rajasthan has low sulphur and high wax content, which cannot be easily used by most Indian refineries, because of inherent difficulties in the refinery configuration. As a result, Cairn has recently approached the government that they should be permitted to come to a swap arrangement with Indian Oil Company (IOC) whose refineries are in a position to use low sulphur crude. Such a move, when approved, will benefit Cairn which sells the Rajasthan oil at a discount because of sulphur and wax contents.
As long as the oil producer does not violate the law of the land, they should not be subject to such approvals from government for selling their products to another domestic company, which, in this case, happens to be a government entity. This move will also benefit IOC in the long run. It appears that an earlier request to have this processed in Jamnagar refinery (owned by Reliance) was not approved. Such obstacles are handicaps in national development and need to be avoided.
A brief study of their website indicates satisfactory progress made in their operations in Rajasthan, Andhra Pradesh and Gujarat. Cambay basin (in Gujarat) is the smallest unit with a production of 5,204 barrels of crude oil and 18 mmscf (million standard cubic feet) of gas per day. As against this, Rawa (off Andhra Pradesh) has a daily crude output of 27,165 barrels and gas at 55 mmscf per day. Rajasthan's Barmer leads in oil production at 180,000 barrels per day.
Once some of these pending matters are cleared, it would appear that Cairn has its own plans for making future financial commitments and to undertake new projects.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)