Based on the direction from Prime Minister Manmohan Singh, the Planning Commission will prepare the draft Bill on Dispute Resolution in public contracts in consultation with all stakeholders and ministries.

In a first step to improve the institutional arrangement for dispute settlement, Singh asked the panel to prepare a draft bill to put in place a mechanism for speedy resolution of disputes relating to public contracts or PPP projects.

The setting up of an institutional mechanism is in the interests of all concerned as it can provide assurance of speedy resolution of disputes, especially in respect of large public contracts.

It may be noted that the rapid expansion of Public Private Partnerships (PPP) attracted investment of a few lakh crore of rupees in different sectors.

A statement from the Prime Minister's Office says most concession agreements specify the obligations of project authorities along with timelines for fulfilling such obligations. Whenever some of these obligations are not fulfilled, projects get delayed, which in turn increases project costs and reduces the returns, the statement said.

Moreover, the private sector entities often find it difficult to enforce their contractual rights and tend to stop short of claiming damages due to them for fear of antagonising project authorities, it said.