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Centre to study Karnataka plea on road projects
Mr P. Chidambaram
K.R. Srivats
New Delhi, July 23 The Finance Minister, Mr P. Chidambaram, has agreed to look into Karnataka’s suggestion to factor in the land costs in the total project costs for viability gap funding (VGF) of infrastructure projects done through public private partnership (PPP) route.
“They (Karnataka) have raised the issue of factoring in land costs. We will examine it,” Mr Chidambaram told Business Line on the sidelines of Conference of Chief Secretaries on Public Private Partnerships (PPPs) here. <
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Karnataka has drawn the attention of the Centre that greenfield road projects implemented through PPP mode were not viable in many cases as the land cost was substantially high.
The VGF scheme does not factor in land costs as part of total project costs. It was submitted that the scope of the scheme be modified to factor in the land cost as part of total project cost for VGF purposes.
“The State Government is not able to afford land cost, which has gone up exponentially in certain areas. If land cost could be included in project costs for VGF purposes, many projects could be done,” a Karnataka Government official said.
The VGF scheme provides financial support in the form of capital grant for PPP projects in various infrastructure sectors.
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