Currently, projects worth $500 billion are being executed under the model in sectors such as highways, railways, ports, airports, telecom and power. The proposed regulator will monitor these as per the model concession agreement (MCA) -- agreed upon between private developers and the government -- that entails norms, timelines and revenue-sharing mechanism. The regulator will also have the power to penalise private contractors and cancel projects if need be, said a Planning Commission official who didn't want to be named.

"In the roads sector, the National Highways Authority of India (NHAI) often fails in checking project delays and disciplining hundreds of contractors. The new regulator would ease the pressure on government agencies and bring more focus on development," he said.

According to prevailing norms, the government appoints independent engineers who supervise the implementation of projects as per the MCA. The government has found the system inadequate and now wants to put the entire process under a stronger body, the official said.

The proposed regulator will also ensure that public assets such as land transferred to the private developer are not used for purposes other than as specified in the contract and will make it mandatory for the developers to return dues to the exchequer as per the contract.

The official said that apart from the regulator at the Centre, it has also been proposed to set up a PPP project monitoring unit (PMU) to ensure a check mechanism at the project level itself. The PMU will be headed by an officer in the rank of superintendent engineer/director. Each PMU may oversee 2-3 PPP projects. However, if the project cost is above Rs 2,500 crore, the PMU would look after only one project.

The need for a new mechanism has been felt due to the poor record of several PPP projects. In the roads sector alone, several projects have missed milestones on numerous occasions leading to delays and cost over-run.
Airport development programmes particularly have been a laggard and the concessionaires have been hauled up for missing deadlines and targets. The same is the case with roads, in the government's National Highway Development Programme (NHDP) where physical completion is just 49% in phase-I and award of concessions has covered just 9% of the Rs 80,000-crore phase-III in 2007-08. The delays are on various fronts like land acquisition, environmental clearances and procedural nitty-gritty.