Centre approves continuation, revamping of Public-Private Partnerships in VGM scheme
Nov 11, 2020
New Delhi [India], November 11 : Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi approved the continuation and revamping of the scheme for financial support to Public-Private Partnerships (PPPs) in Infrastructure Viability Gap Funding (VGF) Scheme till 2024-25 with a total outlay of Rs 8,100 crore on Wednesday.
As per the government's release, the revamped scheme is mainly related to the introduction of the following two sub-schemes for mainstreaming private participation in social infrastructure:
The sub-scheme one would cater to 'social sectors' such as wastewater treatment, water supply, solid waste management, health, and education sectors among other sectors.
"These projects face bankability issues and poor revenue streams to cater fully to capital costs. The projects eligible under this category should have at least 100 per cent operational cost recovery. The central government will provide the maximum of 30 per cent of total project cost (TPC) of the project as VGF and State government or sponsoring central ministry or statutory entity may provide additional support up to 30 per cent of TPC," the release said.
Sub-scheme two will support demonstration and pilot social sector projects that may be from the health and education sectors where there is at least 50 per cent operational cost recovery.
"In such projects, the Central government and the state governments together will provide up to 80 per cent of capital expenditure and upto 50 per cent of operation and maintenance (O&M) costs for the first five years. The Central government will provide a maximum of 40 per cent of the TPC of the project. In addition, it may provide a maximum of 25 per cent of operational costs of the project in the first five years of commercial operations," the release added.
Union Finance Minister Nirmala Sitharaman while addressing a press conference after the CCEA meeting said that since the inception of the scheme, 64 projects have been accorded 'final approval' with a total project cost of Rs. 34,228 crore and VGF of Rs. 5,639 crore, and till the end of the financial year 2019-20, VGF of Rs. 4,375 crore has been disbursed.
As per the Union Ministry, the aim of the scheme is to promote PPPs in social and economic infrastructure leading to efficient creation of assets and ensuring their proper operation and maintenance, and make the economically and socially essential projects commercially viable.
"The scheme would be beneficial to the public at large as it would help in the creation of the Infrastructure for the country," the government added.
