The Hindu Business Line : CCEA clears scheme to fund public-private partnership

THE Cabinet Committee on Economic Affairs (CCEA) on Monday approved the introduction of a scheme for financial support to public private partnership in infrastructure projects implemented by entities with a minimum 51 per cent private equity.

"It will be a plan scheme to be administered by the Finance Ministry and suitable budgetary provisions will be made in the annual plans on a year-to-year basis," the Finance Minister, Mr P. Chidambaram, told reporters after the meeting.

The sectors that will be eligible for such funding are roads and bridges, railways, seaports, airports and inland waterways and power. It also includes urban development projects such as urban transport, water supply, sewage, solid waste management and other physical infrastructure in urban areas.

The public private partnership will also include infrastructure projects in special economic zones, international convention centres and tourism projects.

"To be eligible for funding under the scheme, the partnership project must be implemented, developed, financed, constructed, maintained and operated for the project term by an entity with at least 51 per cent private equity," the Finance Minister said.

Mr Chidambaram said the empowered committee, with the approval of the Finance Minister, can add or delete sectors or sub-sectors from this list.

The total viability gap funding under this scheme will not exceed 20 per cent of the total project cost. However, the government or 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, the Minister said.

The viability gap funding under this scheme will 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-to-case basis.

Depending upon the funding required, the project proposals will be considered by the designated empowered institution and or an empowered committee of officers.

Viability gap funding up to Rs 100 crore for each project may be sanctioned by the empowered institution subject to the budgetary ceilings as indicated by the Finance Ministry, while funding up to Rs 200 crore may be sanctioned by the empowered committee.

However, for funding requirements exceeding Rs 200 crore, the empowered committee will be able to sanction funds only with the approval of the Finance Ministry, Mr Chidambaram said.

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