Adopting a comprehensive mechanism to make information available to the stakeholders concerned in an appropriate and timely manner entails certain operational costs. In addition, the governing capacity of the entities also needs to be upgraded to manage such a flow of information. In large infrastructure project PPPs, it is generally acknowledged that such direct costs are not very significant (e.g. Leuz, 2007).
Another argument against increased disclosure is the possible competitive harm to the private partner that may occur when information about a project (and indirectly about the private partner) makes it vulnerable to competitors who would then be privy to competitive information. Setting out a disclosure mechanism would need to address such concerns, and require the project to disclose only that information which is useful for decision making.
| Corporate Sector Disclosures Stringent disclosure norms have been set in place for corporate governance after a series of high profile organization lapses (Enron, Worldcom etc.). The "Cadbury Report" identified lack of disclosures in executive compensation contracts as one of the major contributors to corporate governance failure. The financial sector, the world over, is witnessing an increasing requirement to disclose information to stakeholders, including regulators and the general public, as well as voluntary codes, in order to bring efficiency into operations and transparency of growth and profitability. |
It is seen in some cases that non-binding best practice disclosure (voluntary) is not strictly followed, and hence may not be very effective on a stand-alone basis.
The primary concern is the characteristic of such information; whether it should be labelled as "Confidential" or put into the public domain, which may not be in the "strategic" or "competitive" interests. However, when such information is required, especially during the conceptualization of the projects, it may be useful to set out the boundary conditions under which disclosures would be made. It is essential that disclosures be made in a format that is acceptable to all concerned and within a time frame that allows decision making. Moreover, disclosures should be amenable to independent verification.
| Disclosure Requirements under Statutory Framework There are many statutes and regulations that require the public entity and the private partner to disclose certain information. There are many disclosures mandated by the Companies Act, 1956 pertaining to project companies set up by the private partner. There are other disclosures that have to be made under the Chief Vigilance Commission and Right to Information Act. These disclosures may be made to stakeholders either by the private partner or by the public entity. |