News Highlight
The Department of Economic Affairs (DEA) notifies Scheme for Financial Support for Project Development Expenses of PPP Projects – India Infrastructure Project Development Fund Scheme
India Infrastructure Project Development Fund Scheme
- It is a central sector scheme which will facilitate the development of quality PPP projects by providing necessary financial support to the project sponsoring authorities in the central and state governments.
- Funding under this scheme will be in addition to the already-operational Scheme for Financial Support to PPPs in Infrastructure, essentially a viability gap funding (VGF) scheme, notified in December 2020.
- Under the VGF scheme, support is granted for PPP infrastructure projects that are economically justified but commercially unviable.
Objectives of India Infrastructure Project Development Fund Scheme :
- IIPDF’s primary objective is to fund project development costs of potential PPP projects, including costs of engaging consultants and transaction advisors, thereby increasing the quality and quantity of successful PPPs and allowing informed decision-making by the government based on good quality feasibility reports.
- The IIPDF will assist projects that closely support the best practices in PPP project identification and preparation as set out in guidance to be issued by the Department of Economic Affairs from time to time.
Organisational Structure:
- The IIPDF will be administered by the Empowered Institution. The Empowered Institution will:
- Select projects for which project development costs will be funded.
- Set the terms and conditions under which the funding will be provided and recovered.
- Set milestones for disbursing and recovering (where appropriate) the funding.
Viability Gap Funding (VGF) Scheme
- Viability Gap Finance is a grant to support projects that are economically justified but not financially feasible.
- The scheme is designed as a project plan administered by the Ministry of Finance and the amount in the budget is made on a year-to-year basis.
- Such a grant under VGF is provided as a capital subsidy to attract the private sector players to participate in PPP projects that are otherwise financially unviable.
- Projects may not be commercially viable because of the long gestation period and small revenue flows in future.
- The VGF scheme was launched in 2004 to support projects that come under Public-Private Partnerships.
Pic Courtesy: freepik
Content Source: PIB