Government of India has drawn up a very ambitious Public Private Partnership (PPP) programme in infrastructure sectors, including the roads sector. To avoid delays that have been witnessed in the approval of publicly funded projects in the past, Public Private Partnership Appraisal Committee (PPPAC) has been set-up with the mandate to fast track the appraisal and approval of central sector PPP projects where the capital costs or underlying value of the assets is more than Rs. 250 crore. PPPAC is expected to complete its due diligence within a period of four weeks for final approval and the PPPAC has been keeping to this timeline.

Since its constitution in January 2006, PPPAC has received forty proposals out of which 28 have been granted in-principle or final approval. The fast track clearance of projects in the Highways sector can be assessed from the very fact that out of 29 road projects received so far, 23 have been granted in-principle or final approval. In the past, the timeline for approval of central sector projects has generally been fourteen to sixteen weeks.

The decisions of the PPPAC are consensual in nature and the Administrative Ministries participate in the decision making as members. Contrary to the general belief, large contingent liabilities can devolve on the Government in PPP projects because of sharing of risks further, since they involve transfer of public assets, including land, delegation of government authority to collect and appropriate user charges, provision of services to the users in a monopoly or semi monopoly situation etc., there is a special obligation imposed on the government to ensure service quality and due diligence before approval is granted. PPPAC has been adding value by accelerating the approval process within the Government, reducing the transaction costs and acting as a central focal point for identifying and disseminating best practices in rolling out PPPs across sectors and Ministries of the Government.

Public Private Partnership appraisal: expedited four-week approval for central projects, with shared liabilities and service-quality obligations. Public Private Partnership Appraisal Committee (PPPAC) provides a centralised fast-track approval mechanism for central sector PPP projects above the threshold, conducting four-week due diligence and making consensual decisions with Administrative Ministry participation. PPPAC reduces transaction costs and spreads best practices while assessing and highlighting government exposure to contingent liabilities arising from transfer of public assets, delegation of charging authority, and monopoly service provision, thereby informing the heightened obligation for due diligence and service-quality safeguards before approval.