Last Updated:
28 Oct 2021

Public-Private Partnerships in Infrastructure Projects: Public Auditing Guidelines

Creation of durable and high quality infrastructure is a prerequisite for rapid economic development and requires sustained investment supported well by technological innovation, skilled workforce and excellent project management. For governments alone to bring together all these elements is not always possible. This realization has brought together the public and the private sector in a mutually beneficial relationship in the form of Public Private Partnerships (PPPs) to execute not only infrastructure projects but also engender innovative strategies for social development. PPPs, while bringing in private capital and experience, also involve transfer of valuable public assets as well as foregoing future revenues in the form of concessions. To ensure that such arrangements always enjoy high credibility in the public eye, due diligence, transparency, objectivity and probity of the entire decision making process are all paramount if these arrangements are to succeed and continue for future projects. The role of public auditors, therefore, becomes critical in assessing whether such arrangements are truly in public interest and are also fair and balanced in sharing of risks as well as rewards. Audit of such entities poses a huge challenge and requires a change in the audit methodology as also the approach of public auditors. The audit while promoting accountability should not discourage private sector involvement, investment and innovative management techniques. To meet this objective, it has been felt necessary to bring out a Guideline for audit of Public Private Partnership Projects that at once reflects the best practices world over and yet is rooted in our experience of auditing government operations over the years. As PPP mode of financing in creation of public infrastructure is gaining momentum in India, timeliness of these Guidelines cannot be disputed. This concern was felt by the Prime Minister himself while addressing the Accountants General Conference in 2008 when he stated that “Public Private Partnership Projects are becoming increasingly common in key infrastructure sectors of transport, power, urban infrastructure, tourism and railways. Audit needs new skills to evaluate these complex arrangements”.