The Truth about PPP: Heads They Win, Tails We Lose
Looking at some of my earlier battles for Right to Information (RTI), I remembered an interesting aspect of public private partnerships (PPPs). As information commissioner, I had come across many instances where PPPs clearly refused to accept that they were public authorities and hence subject to the RTI Act. 
 
Some of these agreements were scandalous and when I would order them to give information, since they were either controlled or substantially financed by the government, they would often get stays from courts. 
 
In one case the government department officially confirmed that they had no copy of the agreement! 
 
The Central information commission (CIC) sent a letter to the government in 2011 that it should include a clause in all PPP agreements that both parties acknowledged that these entities were public authorities and hence subject to the RTI Act. Unfortunately, at that time the government refused to do this. 
 
After retiring, I filed an RTI application with Mumbai Metro One Pvt Ltd, since I was aware that the government had 26% equity in it. They refused to provide information, claiming that it was a private company and not a public authority. I approached the Maharashtra information commission, which gave a clear order that Mumbai Metro One was a public authority and hence subject to the RTI Act. I then obtained the agreements, bid documents and other information. 
 
This also reveals a fascinating story.  The private company is Reliance Infrastructure Pvt Ltd (Reliance Infra) that has a French partner with minority stake. Reliance Infra got the right to make and operate the Mumbai Metro after a competitive bidding. Reliance Infra had committed that the project cost would be Rs2,356 crore and it would be completed within 60 months. It actually took 83 months and the company claimed that the project cost had gone up to Rs4,321 crore; an increase of 83.4%! 
 
In the agreement it was committed that the fare would be Rs6 to Rs10 notionally for 2004 with an 11% increase every four years. By that calculation, the fare should be Rs9 minimum and Rs15 maximum in 2020. There is no clause in the agreement for any other increase due to any cause. It appears to be a well-crafted agreement.
 
One of the key reasons for having PPP projects is said to be to get finance and expertise. In this project the government gave Rs650 crore as ‘viability gap funding’, land worth about Rs600 crore and Rs132 crore as equity. Thus, the total amount given by the government was about Rs1,382 crore, plus monopoly rights.
 
Reliance Infra contributed only Rs380 crore as equity. The rest came as loans mainly from public sector banks. Yet the equity share of Reliance Infra is 74% and 26% for the government.  
 
At present, the fare is Rs10 to Rs40. Reliance Infra claimed that since the investment has gone up, this too is unaffordable and fare should be Rs10 to Rs110 as decided by a wise fare fixing committee!  
 
Reliance Infra claims it is losing Rs1 crore per day. The original agreement is for Reliance to build and earn for 30 years after which it should be handed over to the government. 
 
The way this is going, it appears the government will probably give a subsidy to this project, or organise a loan waiver from all the banks and give the entire project to Reliance permanently, instead of for 30 years. It is also possible that all three may be done.
 
An international consultant, Louis Berger was appointed in May 2013 by the Mumbai Metropolitan Region Development Authority (MMRDA), the government agency, to evaluate the increased costs and delays claimed by Reliance Infra. 
It gave a report in the end of April 2014 stating that most of the claims for increase in project costs or fares by Reliance Infra were untenable and the government should not accept them. The report has clearly stated that most of the delays were due to Reliance Infra and many costs had been grossly underestimated while bidding by the company.
 
As an example, while bidding, Reliance Infra had estimated the cost of the car depot at Rs46 crore, but claimed that it spent Rs322 crore. 
 
The agreement did not have any provisions for cost escalations and yet a fare fixing committee has recommended a fare structure of Rs10 to Rs110.  
 
It is clear that at such a fare the ridership would go down significantly making the project completely unviable. Reliance had given a business plan when it bid for the project. 
 
It is apparent that the cost estimates and the business plan were not even reasonably correct. Since Reliance Infra’s contribution is less than 10% of the stated cost, the government has to make it work, unless it has the courage to take it back. 
 
Many of us have suspected that most PPP projects result in public resources being handed over to private businesses for a song. 
 
It is also believed that private parties often gold plate the project. If the business plan works well, the business makes great profits; if it does not, the public loses. 
This is the classic ‘heads I win, tails you lose’ in action. 
 
This article is not about Reliance Infra or any particular government. My perception is that the government agency, MMRDA, has made a valiant attempt to defend public interests, but is unlikely to succeed ultimately. 
 
In such PPP agreements, public resources are being given away almost as gifts to private business. The real loser is the poorest farmer in Vidarbha or the tribal in Gadchiroli whose resources are being given away as gifts. 
 
Is the design of our PPP agreements flawed? Or is this the consequence of a legal-judicial system which favours the powerful? 
 
I concede that the argument against PPPs has been lost a long time back. But it should be the endeavour of everyone in our nation to come up with agreements where the public’s interests are safeguarded and the tendering system becomes meaningful. 
 
In many cases, vital changes are made subsequently, making the tendering process a farce. 
 
I am hoping the government will at least make it mandatory that all PPP projects will be made subject to the RTI Act. They are public authorities as per the law, but take advantage of our dysfunctional legal system.  
 
Perhaps citizens will better monitor such projects far better than the government agencies.
 
(Shailesh Gandhi served as Central Information Commissioner under the RTI Act, 2005, during 18 September 2008 to 6 July 2012. He is a graduate in Civil Engineering from IIT-Bombay. Before becoming a full time RTI activist in 2003, he sold his packaging business. In 2008, he was conferred the Nani Palkhivala Memorial Award for civil liberties.)
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    COMMENTS

    Manoj

    10 months ago

    Must applaud you for your tireless fight against bilking of projects.

    There is a lot of gaming of PPP projects, because they are inherently supposed to be more flexible that straight work contracts. Hence companies bid low to get the projects and then renegotiate the terms in their favour leveraging obliging politicians and bureacrats. The 3rd element of PPP - Public is neither represented nor even kept informed of what is being done in their name. Reliance is of course well known for making the government dance to it's tune, whichever be the party, but even reputed multinationals do this trick.

    There are several far superior PPP models that have been used by countries like UK, China, Singapore etc, but these countries are nowhere as chaotic as indian government is in announcing badly thought out projects and policies at the drop of a hat. Put it down to poor education of the so-called educated class, and the high degree of criminality we prefer in politicians, or indifferent bureacracy, but public service, planning, project execution, careful use of community resources are non existent in India.

    Veeresh Malik

    11 months ago

    There are all sorts of sanctimonious letters from assorted government departments to each other about how PPPs should come under the RTI Act. Likewise Public Grievance. I support your efforts but have no idea what to do anymore.

    REPLY

    Nalla Rao

    In Reply to Veeresh Malik 11 months ago

    Sir it was always like that all contracts with private companies in Govt and semi government organisations are skewed to favour the Private Operater.
    Air India is cesspool of this .
    I exposed Corruption by the CMD and others and was rewarded with a Termination.
    Air India lawyers are upset that I have filed Criminal Cases against the CMD and other Criminal elements .
    The Court has not responded as yet .
    They obtain Stay orders behind my back and these lawyers grease the system and fatten their purses at the public Exchequer cost in crores of Rupees.

    Manoj

    In Reply to Nalla Rao 10 months ago

    Oops. Are we brothers in arms? Similar experiences in government. After a dozen years, I left for my sanity and integrity and have not been paid my dues for 15 years and counting. Wheels of justice grind exceedingly slowly in India, but please hang in there - there are some good folks too among the sleazy crowd in the government. Hope your case reaches one of them and you do get at least some of what you earned.

    If Maha Metro Is a Public Authority, Why No Suo Moto Disclosures under RTI Act?
    Despite the Maharashtra Metro Rail Corp Ltd (under which come the Pune and Nagpur Metros) being a public-private-partnership (PPP) project, which implies it is a public authority under the Right to Information (RTI) Act, everything about it is opaque.
     
    Pune-based RTI activist, Qaneez Sukhrani has filed a complaint with the Central Information Commission (CIC), Delhi and the State Chief Information Commission, Maharashtra, a fortnight back, after Maha Metro failed to put up suo moto information on its website under Section 4 of the RTI Act. Maha Metro has admitted that it comes under the RTI Act. As for the CIC, it has replied that her complaint has been directed to the compliance cell.
     
    As per the rules of any PPP project, the private body, which enters into partnership with a government body automatically becomes a government agency and is, therefore, a public authority under the RTI Act and, therefore, transparency is mandatory. 
     
    The rule states:  “1.2.1: 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. The documents under the ambit of the exemption from disclosure of information under section 8(1)(d) and 8(1)(j) of the RTI Act would not be disclosed suo moto. Further, information about fees, tolls, or other kinds of revenue that may be collected under authorization from the government, information in respect of outputs and outcomes, process of selection of the private sector party may also be proactively disclosed. All payments made under the PPP project may also be disclosed in a periodic manner along with the purpose of making such payment.’’
     
    Says Ms Sukhrani, “Pune’s Metro comes under the Maha Metro, which is a 50:50 jointly owned company of the government of India and the government of Maharashtra. For an SPV, which claims to be professional, where is their knowledge of suo moto disclosures under Sec 4 of the RTI Act 2005?”
     
    “Currently, http://punemetrorail.org/ shows *how to file RTI application* and *list of PIO/FAA*, both of which have been subsequent to my complaint. But where are the rest of the suo moto disclosures as per Section 4? Such an opaque attitude means denial of uploading of standard contracts, drawings, alignments of the intended routes,” she added.
     
    Ms Sukhrani initially sent her complaint by email in the first week of September to Maha Metro, which was ignored. Thereafter, on 14th September, she sent a copy of it to SIC and CIC asking them to take due cognisance and pass strictures.
     
    She stated in the complaint,  “As you are an SPV under the government of Maharashtra, you also come under the RTI Act 2005. I looked but could not find a tab indicating suo moto (voluntary) disclosures. Neither did I find a list of PIOs & FAAs under a separate tab. Kindly enlighten tomorrow itself whether you come under the RTI Act 2005 or not.”
     
    The planning department of Maha Metro replied, “With reference to your mails, this is to inform you that, Maharashtra Metro Rail Corp comes under the RTI Act 2005. Suo moto disclosure is being uploaded on website. This is for your information please.” 
     
    Ms Sukhrani says, “After my complaint to the information commission, I received a call from Mr Prahlad Kachare that he has joined Maha Metro to undertake RTI related work. After this on the same evening, I received their acceptance that they fall under the ambit of RTI Act 2005 and an assurance from Maha Metro that they will do needful. Till today their website remains as it is. On the 19th of September, I received an acknowledgement from CIC with a file number that my complaint has been registered with the compliance cell.’’
     
    Now with Dr Kachare on the hot seat of RTI-related information, we hope citizens would get a peek into the intricate information of the two metro lines, as activists and experts allege haphazard planning of the alignment of the metro route itself!
     
    (Vinita Deshmukh is 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”.)
     
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    Central Information Commissioner Wants MPLADS Fund Data in Public Domain; Deems MPs as Public Authorities
    The central information commission (CIC) has recently recommended that all parliamentary parties and MPs (members of Parliament) should be answerable and accountable for funds of MPLADS (members of Parliament local area development scheme) and must make every aspect of this information public on their respective official websites.
     
    Prof Sridhar Acharyulu, the central information commissioner who gave an order on 15 September 2018, has said that every MP is a public authority as per an earlier CIC decision in 2009. He has challenged the political parties to contest if each of their MPs is not a public authority. He has stated “the Commission recommends that all the parliamentary parties or any of their representatives submit, if they so desire, their written contentions, if they believe that their parliamentary board/party is not a public authority under the RTI Act, and justify the same before 9 October 2018.”
     
    CIC has also directed the National Informatics Centre to incorporate on the official website of each MP, a software provision to upload an application for recommendation of works under MPLADS, the progress of work and the detailed final report with all the beneficiaries and the assets created and, more importantly, make it accessible to the common-man. 
     
    This, the commissioner remarked, would enhance the dignity of an already transparent institute - the Parliament - and prevent corruption in MPLADS as apprehended by various committees, besides saving thousands of crores of rupees of public money every year. This citizen-empowering CIC order is a sequel to an RTI (Right to Information) application filed by one Ram Gopal Dixit on 26  September 2016 seeking information/ certified copies of relevant documents on works recommended by his Lok Sabha MP Rajesh Diwakar of Hathras Lok Sabha constituency.  
     
    Mr Dixit sought the following information from the ministries of railways (MoR) and of statistics & programme implementation (MOSPI):
    • Agencies through whom the works were executed and payments made;
    • Physical status/progress of works recommended in this constituency,
    • MPLADS fund utilisation and status of works recommended and executed in the North Eastern Railway region, such as roads/railway stations, etc;-
     
    The CPIO (central public information officer) of MoSPI did not provide him with any information regarding the railways department; instead, he forwarded his application to the MPLADS division of the Lok Sabha secretariat.
     
    This was irrelevant as this division maintains records of the overall statistics and cannot give specific information that Mr Dixit asked for - namely, information about MP Rajesh Diwakar’s constituency. 
     
    He was told that the vital information on the works that his MP had selected were held exclusively by the MP himself, and the MP alone would know why he left his quota unspent. 
     
    The CPIO of MoSPI further informed Mr Dixit that it received data only of the overall distribution of MPLADS funds;, but category-wise utilisation into data of every welfare area was only maintained only by the district authority and not by their ministry. 
     
    Aggrieved by the information denied to him, Mr Dixit filed his second appeal with the CIC saying, “the government of India has created a website for the Indian Parliament, allocating a page for each parliamentarian. There the Honourable Member of Parliament, Mr. Rajesh Kumar since 2014, has generously shared even his personal details like date of birth, names of family members, address and email id etc. The same page should have contained details of the MPLADS works in his constituency. ‘’
     
    Prof Sridhar Acharyulu, in his 15 September 2018, order explained why MPLAD funds should be made transparent by stating that:  “the MoSIP in its recent report (August 2018) revealed that Rs12,000 crore of MPLADs (funds) was unspent. In February 2018, funds allotted but unspent stood at Rs4,773.13 crore while 2,920 instalments of Rs2.5 crore were yet to be released, resulting in a total backlog of Rs12,073.13 crore. These problems can be fixed by making every process of the works transparent. It is reported that a year after they took office, 298 of 542 members of the 16th (present) Lok Sabha have not spent a single rupee from the Rs5 crore corpus.’’
     
    The commissioner further observed:  “A look at the latest statistics reveals the truth. The details of the works (names, location, beneficiaries, payments etc) in each constituency and as per the MP are not available. Out of the total fund entitlement of Rs2,725 crore (Lok Sabha) only Rs1,412.5 crore was released by the government and out of Rs1,225 crore (Rajya Sabha) only Rs594 crore was released.” 
     
    The commissioner also mentioned in his order that, the question of whether an MP is a public authority under the RTI Act, was deliberated upon by a bench of commissioner Wazahat Habibullah and IC (information commissioner) Shailesh Gandhi in Girish Chandra Mishra vs Smt Sonia Gandhi, on 10 December  2009. It was contended that with the specific authorities conferred by the Constitution, each individual MP should be regarded as public authority under the RTI Act.
     
     
    Inadequate information on MP Rajesh Diwakar’s official website
     
    The data related to the cumulative expenditure of MPLADS funds for the period 2014-2019 for the constituency of Hathras during the tenure of Mr. Rajesh Kumar Diwakar as Member of Parliament available at https://www.mplads.gov.in/MPLADS/UploadedFiles/HTML/16ls/lsstat24.htm is:
     
     
    The figures speak for themselves, states the CIC:
    • Out of the entitlement of Rs25 crore, MP Rajesh Kumar Diwaker (Hathras) has recommended works of Rs17.38 crore. This means, 80.5% of the released amount is spent and the balance unspent amount is Rs4.12 crore.
    • People of his constituency, including this appellant, have every right to know the progress of these works, payments made, reasons for not spending the amount, etc. The commission hopes that Mr Diwakar will understand his duty and honour the commitment made by his party BJP to transparency, and publish the MPLADS works details on his page, regularly update them and explain the figures given above, in discharge of his obligation towards the people of Hathras constituency. It is legitimately expected from the parliamentary board of the BJP to take steps to make all their MPs, especially the MP in this case, accountable and answerable to provide such information. 
     
     
    The following are the detailed directions/recommendations of CIC order of 15 September 2018.
     
    The Commission directs the CPIOs of the offices of secretary general Lok Sabha and Rajya Sabha to place this CIC order on MPLADS before the speaker of Lok Sabha and the chairman of Rajya Sabha, to facilitate appropriate action. The Commission recommends that these two personalities holding high positions in the most important constitutional estate: the central legislature (parliament) to consider:
     
    a) To provide the necessary legal frame for the MPLADS, with specific duties and  compulsory transparency obligations, definitions of breach of duties, prescribing rules and regulations, besides imposing liabilities for dereliction of those duties and breach of rules and regulations; which may include prohibition of certain acts such as:  
    i. assets claimed to have been created under MPLADS not traceable,
    ii. spending MPLADS funds for private works of MP,
    iii. recommending funds to ineligible agencies,
    iv. diversion of funds to private trusts,
    v. works recommended under MPLADS which benefit the MP or his relatives, and
    vi. breach of any norms laid down for recommending works. 
     
    b) This legal frame may also ideally list out the obligations of MPs such as:
    i. duty to inform every year, number of applications received, works recommended, works rejected with reasons, progress of works, details of beneficiaries, and a comprehensive report on MPLADS works after the completion of the MP’s term , to the chairman of Rajya Sabha or the speaker of Lok Sabha, respectively, and to the office of the parliament;
    ii. duty to inform the voters seeking such details through RTI Act and generally; 
    iii. duty of the parliamentary party to post the details on their pages in official websites and on the webpages of the MP such as https://www.india.gov.in/my-government/indian-parliament/
     
    c) To ensure compliance of transparency obligations by the parliamentary parties of various original political parties, having presence of multiple members in the parliament, under section 2(h) of the RTI Act, and direct the office machinery of the parliament to provide the necessary secretarial assistance to fulfil their obligations under the RTI Act.
     
    d) To direct the office machinery in coordination with National Informatics Centre to incorporate on each page of the MP’s official website a software provision to upload an application for the recommendation of works under MPLADS; which could be either recommended; or rejected with reasons in a time bound manner, online; and on recommendation of such work, its progress from time to time shall be reported on the same page; and detailed final report with all beneficiaries and assets created be filed on completion of the work; and more importantly; such a page shall be accessible to the common-man, officers concerned and the parliament. This will enhance the dignity of the already transparent institution—the parliament, and prevent corruption in MPLADS as apprehended by various committees as mentioned above, besides saving thousands of crores of rupees of public money every year.  
     
    e) To take the necessary initiative to develop a code of conduct as has been rightly recommended by the chairman of Rajya Sabha and the vice president of India, in his wisdom to cover ethics in MPLADS. 
    • The commission recommends that the ministry of parliamentary affairs render the necessary assistance to the chairman of Rajya Sabha and the speaker to develop a legal frame for MPLADS as mentioned above and to make all parliamentary parties and MPs answerable and accountable for MPLADS funds as public authorities under the RTI Act to prevent MPLADS irregularities.
       
    • The commission directs Rakesh Kumar, secretary (PG) and CPIO, railways department to collect information related to works recommended under MPLADS by Rajesh Kumar Diwakar MP for the season 2016-17, details of implementing agencies and MPLADS fund utilisation on point number 3 of the RTI application and provide the same to the appellant within 30 days from the receipt of this order
      .
    • The state governments and their nodal district authorities are under the jurisdiction of the state information commissions; hence, apparently the CIC has no authority to direct them on these issues. But the information sought by the appellant is related to MPLADS work for which the respondent MoSPI from Centre has released funds, and such information is supposed to be disclosed by the authorities on their own as per Section 4(1)(b) of the RTI Act. Non-compliance of section 4 obligations will amount to a serious dereliction of the RTI Act.
       
    • The concerned officials of ministry of railways are liable for denying the information, for this kind of a reply without typing the name of the officer, for drafting in English in response to a Hindi application and using abbreviations without expansion, amount to deliberate denial of information. The commission records its admonition for such dereliction of duty.
       
    • The commission recommends all the parliamentary parties or any of their representatives to submit, if they desire, their written contentions, if they believe that their parliamentary board/party is not a public authority under the RTI Act, to justify the same before 9 October 2018.
       
    • The commission requires under section 19(8)(a)(iii) of the RTI Act, the public authority (the ministry of statistics and program implementation) to make the necessary changes to publish MP-wise, constituency wise and work-wise details, with names of beneficiaries, and reasons for delay, if any, after duly procuring from the concerned district administration and ensure its voluntary disclosure under section 4. The case is posted for compliance by MoR, MoSPI, on 9 October 2018 at 2.30pm. 
     
    (Vinita Deshmukh is 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”.)
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