The Hindu : Business : CCEA nod for PPP in infrastructure

Online edition of India's National Newspaper
Tuesday, Jul 26, 2005

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Business

CCEA nod for PPP in infrastructure

Special Correspondent

Projects should have 51 p.c. private stake

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Monday approved the launch of a Plan scheme for financial support to `public private partnerships' (PPPs) in projects for developing the country's infrastructure.

To fund the scheme, suitable budgetary allocations are to be made in the Annual Plans on a year-to-year basis.

Eligible projects

Briefing newspersons, the Finance Minister, P. Chidambaram, noted that it would be a Plan scheme administered by the Finance Ministry.

The infrastructure sectors eligible for project funding under the PPP scheme included roads and bridges, railways, airports and inland waterways; power, urban development, urban transport and water supply, sewage, solid waste management and other physical infrastructure in urban areas, besides special economic zones (SEZs), international convention centres and other tourism projects.

The project must be implemented — developed, financed, constructed, maintained and operated for the project term — by an entity having at least 51 per cent of its equity as private stake.

Another stipulation, Mr. Chidambaram said, was that the total `Viability Gap Funding' (VGF) under this scheme should not exceed 20 per cent of the project cost.

"However, the Government or the statutory entity that owns the project may provide additional grants out of its budget, but not exceeding a further 20 per cent of the total project cost," he said.

The implementing agency must be selected through a transparent and open competitive bidding process. The VGF would normally be in the form of a capital grant at the stage of project construction.

Proposals for any other forms of assistance may be considered by the Empowered Committee and sanctioned with the approval of the Finance Minister on a case-by-case basis.

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