Considering that dispute resolution in large public contracts is an area of growing concern, which has marred many of the mega-road projects in the country, Prime Minister Manmohan Singh on Thursday instructed Planning Commission to formulate a draft bill to address the problem in consultation with all stakeholders and concerned ministries.
According to an official release issued by the PMO, the Prime Minister has initiated the first steps in improving the institutional arrangement for dispute settlement and for the purpose, he has asked the Planning Commission workout a legal framework.
Following the rapid expansion of Public Private Partnerships (PPP), which has already attracted investment of a few lakh crore of rupees in different sectors, “there are concerns about the dispute resolution mechanisms in place,” the release said, adding that there is a “certain dissatisfaction among private sector participants” arising from the responses they receive from project authorities about the obligations.
Highlighting the fact that most concession agreements specify the obligations of project authorities along with timelines for fulfilling such obligations, the release said, “Whenever some of these obligations are not fulfilled, projects get delayed, which in turn increases project costs and reduces the returns. Private sector entities often find it difficult to enforce their contractual rights and tend to stop short of claiming damages due to them for fear of antagonising project authorities.”
There are a few hundreds PPP contracts already in operation and more are more expected to come up on a fairly rapid pace.