Planning Commission seeks stiff norms, defined roles for private consultants

NEW DELHI: In order to avoid potential conflicts of interest, the Planning Commission has suggested key infrastructure ministries to review the role and responsibilities of consultants who help the government implement public-private partnership projects.

“It is common practice to engage private consultants for drafting concession agreements but excessive reliance on commercial consulting firms without requisite diligence by the project authority can lead to unintended consequences,” the commission said in a note sent last week to ministries associated with infrastructure development. “While private sector consultants are wellversed in commercial matters, their exposure to and concern for public policy is usually limited.”

The note said since consulting firms get bulk of their business from corporate houses, they are “perhaps over-responsive to the concerns of the private party”.

“There are also possible conflicts of interest, which could arise in individual cases…It is necessary to address all such conflicts of interest, as they can not only compromise the outcome of PPP projects, the credibility of the project authority may also attract legitimate criticism,” the note said.

Experts said more transparency in the appointment of consultants will surely help raise the bar for PPP projects. “There is a need to have structured disclosures, and more robust transparency for consultants is strongly welcome,” said Kapil Kaul, CEO South Asia at CAPA-Centre for Aviation, which provides independent aviation market intelligence. “Conflict of interest, if any, is a serious issue and it hurts the integrity of the process.”

However, the ministries and the consulting fraternity are not amused.“ The Planning Commission is assuming, on behalf of the line ministries, that there is a problem,” a senior government official said. “But if there is a problem, it will be sorted out by them. Besides, it is the expenditure department, which comes up with the procurement guidelines, so any changes should come from the finance ministry.”

The commission also raised concerns over possible instances where consulting firms advise the government during bidding process of a project and subsequently switch over as adviser of the selected concessionaire. “Government’s consultancy contracts are crystal clear in terms of conflict of interest. If you are working with the government, you cannot work with the private sector company on that project simultaneously. There is a cool-off period as well. So the question of conflict of interest doesn’t arise,” said a senior consultant at one of the big four consultancy firms.