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With public-private partnerships (PPPs) worth crores getting embroiled in more and more controversies, especially in the gas and road sectors, the Prime Minister’s Office (PMO) has stepped in.
It has asked the Planning Commission to formulate a draft Bill on Dispute Resolution in Public Contracts.
This will be done in consultation with all stakeholders and Ministries.
This move comes at a time when the Government aims to get 50 per cent of the $1-trillion investment for infrastructure sector from private companies.
“Dispute resolution in large public contracts is an area of growing concern and the Prime Minister has initiated the first steps in improving the institutional arrangement for dispute settlement,” a statement issued by the PMO said on Thursday.
It acknowledged the fact that the PPPs had attracted investments of a few lakh crores.
The PMO statement admitted that there were concerns over the existing dispute resolution mechanism.
“There is a certain dissatisfaction among private sector participants arising from the responses they receive from project authorities about the obligations of project authorities,” it added, without mentioning any particular case.
However, these issues are believed to be related to falling production in a particular PPP project in the gas sector.
Private companies have been raising concerns over the lack of a proper dispute resolution mechanism which, they say, leads to increase in costs, lower returns on investment and project delays.
“Given the current state of arbitration in India and the likelihood of arbitral awards being challenged in courts, project developers face a long process, which imposes a heavy burden on them,” the PMO statement said.
The PMO said it was essential to consider an “institutional arrangement” to address the disputes to provide assurance of speedy resolution, especially for large public contracts.
“This could be a dedicated institutional arrangement, drawing from the experience of various other tribunals, while eliminating any litigation up to the High Court,” the statement added.
shishir.sinha@thehindu.co.in
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