Sir,
This has reference to the news item ‘Govt to implement PPP mode in 10 key sector’ DE Dec 5.
The decision of the Government to seek help of private players in building infrastructure in the State is quite laudable. The PPP mode will accelerate pace of development in the State which has suffered terribly on account of militancy and natural disasters in the past. As it is not possible for the Government to execute all big projects itself, it has to rely on private players who have both money and expertise in their respective fields. Many of the States in the country have opted this option, and so should Jammu and Kashmir.
However, the Government should enter into contract with such companies cautiously. There have been instances where it has been found that these private players have failed to execute the projects they had taken in hand.
PPP contracts are typically much more complicated than conventional procurement contracts. This is principally because of the need to anticipate all possible contingencies that could arise in such long term contractual relationships. Each party bidding for a project spends considerable resources in designing and evaluating the project prior to submitting a tender. The cost of both successful and unsuccessful bids is in effect, built into total projects costs.
Given the difficulty in estimating financial outcomes over such long periods, there is risk that the private sector party may either go bankrupt or make large profits. Both outcomes can create political problems for the Government causing it to intervene.
Besides there are audit problems. The private players are usually reluctant to go for audit by Government agencies. Hope Government takes every consideration in view to enter the PPP mode.
Yours etc….
Amit Sharma
Jammu
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