The Hindu Business Line : SPV for infrastructure funding approved — Govt to guarantee borrowing up to Rs 10,000 cr

Borrowing up to Rs 10,000 crore by the SPV — India Infrastructure Finance Company Ltd (IIFCL) — during the current fiscal would be guaranteed by the Government.

Fresh annual limits for Government guarantee would be decided at the beginning of every fiscal.

Besides raising long-term funds from domestic and overseas markets, the SPV would also borrow from multilateral lending agencies such as the World Bank and ADB, the Information and Broadcasting Minister, Mr Jaipal Reddy, told reporters after the Cabinet meeting.

The SPV, that would be 100 per cent Government-owned, would fund projects in sectors such as road, bridges, railways, seaports, airports, inland waterways, power, urban transport, water supply, gas pipeline, special economic zones, international convention centres and tourism projects and more, Mr Reddy said.

An empowered committee could add or delete any sector or sub-sectors from this list. This committee would be under the Chairmanship of Secretary (Economic Affairs) and include Secretary, Planning Commission, Secretary (Expenditure) and Secretary of the Ministry concerned dealing with the subject.

The SPV would fund projects in the public and private sectors as well as public-private partnership (PPP) scheme.

However, any project awarded to a private sector company under PPP through competitive bidding shall have overriding priority for funding from the IIFCL. Any project that qualifies for viability gap funding could also be taken up by the SPV for funding.

Apart from direct lending, the SPV would also be refinancing banks and FIs for loans of five years or more.

IIFCL would not undertake project appraisal on its own and would consider only those that have already been appraised by a lead bank.

The loan assistance from the SPV would not exceed 20 per cent of the project cost.

The interest rate for such loans would be low and would be calculated on the basis of the guarantee fees as well as administrative costs incurred by the IIFCL.

To facilitate the establishment of IIFCL, the Cabinet also approved creation of a temporary post at the level of a Joint Secretary in the Department of Economic Affairs (DEA) for four months, Mr Reddy said. The DEA would also constitute a search committee to select whole-time directors of IIFCL.

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