PPP projects may also come under CAG ambit

Mumbai: The go-ahead given by the Supreme Court on Thursday to the CAG to audit the account books of private telecom companies, which have a revenue sharing agreement with the government, is expected to have wider implications for the private public partnership (PPP) projects in the road sector.

M. Murali, director- general, National High-way Builders Federation, said if the CAG starts looking into the books of the private road builders there could be many problems. It could discourage both private and foreign investors in this sector.

“Many companies get foreign funding apart from bank and credit through external commercial borrowings and if the CAG starts auditing the books, foreign investors and even private investors may be discouraged to invest.”

Mr Murali said the fierce competition in the road building sector in the last two years has changed the PPP model.

Earlier there used to be 60:40 regime where the private party put in 60 per cent of the cost and the government 40 per cent.  But today the private party puts in 100 per cent of the cost and also pays a premium to the government. So if a project costs Rs 100 crore the private party puts in Rs 110 crore, with the Rs 10 crore going to the government as a premium.

In the last two years, the NHAI awarded 53 premium based projects. Under these circumstances, the PPP project is not the same as envisaged earlier, said Mr Murali, and so the road PPP projects may not come under the CAG purview.

Supreme Court rejects telecom firms’ plea over audit

A bench of Justices K.S. Radhakrishnan and Vikramjit Sen dismissed the pleas by telecom associations, Association of Unified Telecom Service Providers of India and COAI, who had challenged a Delhi high court order that had given the green signal for CAG audits of the firms’ accounts.

The court order said it was the CAG’s duty to audit telecom firms as part of their revenue goes to the Consolidated Fund of India. The apex court held that the CAG is authorised to carry out audits to examine if the firms are giving proper share of their revenue to the government. The verdict is likely to have far-reaching consequences for private telcos like Bharti Cellular, Reliance Communications, Voda-fone and Idea Cellular.

The telecom firms had submitted that the HC had erred in holding that CAG was empowered to conduct their revenue audits. The firms said the High Court had wrongly assumed that they share revenue with the government and contended they only pay fee, that was a percentage of revenue.