[HumJanenge-YG] B.Standard : RTI Act and PPP Projects

http://www.business-standard.com/india/news/rti-actppp-projects/414226/
RTI Act and PPP Projects

Atul Sharma / New Delhi November 09, 2010, 15:55 IST

If one were to draw up a list of the five most empowering laws enacted in independent India, the Right to Information Act would surely find a place in the list. No other law has brought as much power into the hands of the "little man" as this piece of legislation. Although many years late (the United States enacted the Freedom of Information Act in 1966, Australia adopted the Freedom of Information Act in 1982) the RTI Act, though a five-year-old toddler, has already earned itself a few dozen rulings in various High Courts and a handful from the Supreme Court. Most of these judgments have attempted to expand the scope of the RTI Act. Though the development of the law with regard to the Act is far from over, judicial pronouncements on its applicability to Public Private Partnership (PPP) Projects are particularly rare, leaving open the question whether or not these projects are amenable to the legislation.

One of the reasons for the juggernaut success of the PPP model in India is that it provides the best of two worlds. While private sector efficiencies provide the competitive edge which is the sine qua non of any business venture, partnership with the government ensures continuity, stability and most importantly credibility, which is any business' greatest asset. However, these assets are not freebies and come with strings attached -- in most cases, transparency and accountability to the public at large. While there is no doubt that the governments -- both at the Centre and the states -- are obliged to provide information sought by any person under the Act, the Indian Courts are yet to decide whether PPP projects are to be treated as commercial ventures and retained outside the purview of the Act, or subjected to the same levels of accountability as expected from a democratically elected government and its various organs.

The RTI activist (a term as fresh and novel as Pepsi Max) will argue that a project that involves the government in any capacity must be carried out openly and should be subject to the same checks and balances as the government itself. The entrepreneur, on the other hand, is entitled to suggest that business and governance must never be mixed, especially in today's times when the government has made up its mind to leave business to businessmen and concentrate on governance itself. It is perhaps fair to say that the underlying principle behind the PPP model would be defeated if the body so formed to execute a PPP project was expected to put in place world class facilities and practices while being scrutinized, watched and pulled up at every step of the way. More so, when sector regulators are already in place in various sectors including telecom and airports. Aren't these regulators sufficient to ensure that the interests of the people are being protected and the taxes paid by them are being utilised optimally? Or are additional checks the need of the hour? Further, are there other means of ensuring transparency or is the RTI Act the only available alternative? The questions remain open.

The Comptroller and Auditor General has already taken steps to bring private telecom companies under its umbrella and has cited sections 16 and 18 of the Comptroller & Auditor General's Act, 1971 as the source of its power to audit their accounts. Although the matter is subjudice, both the Delhi High Court and the Supreme Court have declined to stay the CAG from inspecting the accounts of telcos. The government has also expressed its intention to replace the existing CAG Act with a new legislation which will provide wider powers to the CAG to audit the accounts of private companies thereby pointing towards an intention to 'regulate' these projects and monitor them closely.

In a recently concluded national convention on the RTI Act, the Planning Commission advisor, Gajendra Haldea, expressed his desire to see PPP Projects subjected to the purview of the RTI Act. Many Information Commissioners present at the conference echoed the same view and even suggested the Planning Commission effect this move by inserting a clause in the Model Concession Agreement for PPP projects, wherein the concessionaire expressly accept the applicability of RTI to the project. The prevailing mood of those who influence policy making in India appears to be in favour of implementing accountability through the RTI Act.

However, till the time these thoughts are woven into the fabric of law by amending the Act, the question as to whether a PPP project and the bodies executing it are 'public authorities' under the Act remains by and large unanswered. The RTI Act requires only 'public authorities' to provide information to applicants. The term 'public authority' is defined as a body formed under the Constitution, a body formed under any other law made by the Parliament or the State Legislature or a body established by way of a notification. All bodies 'owned controlled or substantially' financed directly or indirectly by funds provided by the government are also considered 'public authorities' and are required to supply information. So are non-government organisations substantially financed (directly or indirectly) by funds provided by the appropriate government.

Since most PPP projects are executed through the JV route, they are generally incorporated entities and are not set up under the Constitution or under any other law. However, many such projects receive funding/investment directly from the government and in some cases, through indirect means. The test which applies to PPP is the test of 'non-government organisation substantially financed'. The Bangalore High Court, in the only authoritative judgment on the subject has observed that the Bangalore International Airport Limited (BIAL)-a PPP formed by the partnership of KSSIDC, AAI and a consortium of private airport operators, is amenable to the RTI Act. The justification provided by the High Court for its finding is this- were the concessions provided to the concessionaire by the state government (including cost of land acquired, uninterrupted supply of power and water etc.) translated into cash flows, the figure arrived at would be a 'substantial amount'.

Surrendering private sector efficiencies and the 'play in the joints' available to the private sector may be too high a price for transparency. Perhaps, the middle path could be retaining the right to information to matters relating to the use of public assets by consumers and keeping the commercial information relating to award of contracts, financial information and such like matters out of the purview of the RTI Act. This may be done by way of an amendment to Section 8 of the Act.

The author is Managing Partner, Link Legal