Swiss Challenge - Call for Transparency
Understanding the importance of Private sector participation in Infrastructure sector in India and a need for profitable innovation and development at the same time, the key concerns of Swiss Challenge method needs to be addressed by the Government.
A major issue is that many proposals under this mode are associated with a lack of competition and transparency. Much of the controversy stems from governments granting exclusive development rights to private proponents without a transparent Bidding process. Private proponents or the Original Project Proponents commonly argue they have intellectual property rights to project concepts, are the only developer interested in the project, or can save the government time and money by sole-source negotiating project details. Unfortunately, governments are often too easily convinced by these arguments and, as a result of being sole-sourced, the unsolicited proposals lend themselves more easily to corruption.
Another major issue is the increasing numbers of Swiss Challenge proposals presented to governments both at the Centre and States and the number is certainly high in the states of Gujarat, Andhra Pradesh and Karnataka; Where in many cases the origin of a project is not clear. Such proposals are beginning to represent a significant share of overall projects in such states and these proposals can create negative public perceptions if there is such lack in clarity and transparency. Many policy makers (Kelkar Committee) have realized the need to directly address them in PPP legislation.
Always giving a chance for increase of burden on governments and corresponding perceptions of corruption, which leads to arguments to prohibit them altogether.
Some states like Gujarat, Karnataka, Andhra Pradesh, Punjab, Haryana and Maharashtra have formulated and adopted their own guidelines and most of them failed to clear the following concerns of the Bidders.
Some of the key concerns are:
Establishing Time Constraints
Under current practice in many states, the government specifies the time allotted to complete certain stages of the approval and bidding phases. The state acts usually specify a time limit for preliminary approval for the project, Original Proponent’s proposal submission, reaching a finalized project, putting the project out to public bid, and a closing date for challengers to submit counter-proposals.
The original project proponent has an obvious competitive advantage with time constraints for counter-proposals. The proponent has spent considerable time and effort preparing the project and subsequently is much more familiar with the project characteristics. An opponent, however, is usually given only a short time to challenge the project (as seen in the above table), as little as 30 days and open ended in case of many. Many potential challengers may not be willing to compete without sufficient time to prepare.
Coordinating among Agencies or ULBs by the state
In most states, the planning and coordination of major infrastructure projects fall within the competence and ambit of different Government Agencies and ULBs. But the States / Ministries select such a proposal directly and Local governments are not involved in such cases. This can lead to lack of transparent proposal evaluation and be a heavy burden for ULBs and Agencies if such proposals are imposed on them ultimately rising to financial constraints leading them nowhere and loss to proponents of Swiss challenge proposals if exercise is not performed in bottom – top approach and lacking communication between the relevant government’s entities.
Determining the Intellectual Property
The Government should determine what part of project proponent comes under Intellectual property and what needs to be disclosed so as to give the competing edge to the Bidders / Counter proposals. It’s not appropriate to ask the third party to match or better the existing proposals without disclosing the required information like Original Proponent’s Commercial Bid, Time frame / schedule for completion of the Project, Details of the projects and verticals and the proposed outcome for the project. Where the technological where and how can be the Intellectual property for the same.
Effective Sector Planning
Allowing the private sector to present proposals in sectors that are part of network infrastructure could be cause for concern. In theory, the private sector’s only concern is making a return on its investment without consideration for the general welfare or overall economic benefit of the country / State (Like in APIDEA and Guidelines for Swiss Challenge – Haryana). For example, a private developer would have little concern if by proposing a new tourist recreational area it is diminishing the country/state’s port expansion capacity in the medium or long term. In order to address such concerns, countries such as Andhra Pradesh, Haryana, and Madhya Pradesh (broadly) only allow unsolicited proposals for projects that are part of its strategic infrastructure investment plan. In these cases, the government periodically defines the priorities in the different sectors in broad terms, leaving project details to be developed by interested parties.