Government sets up fund to facilitate PPP projects

New Delhi: The government has notified setting up of a Rs 100-crore revolving fund aimed at assisting infrastructure projects, under public-private partnership (PPP) model, in the pre-tender period.

Announced in the Budget 2007-08, the India Infrastructure Project Development Fund (IIPDF) would bear the expenses for conceiving new public-private partnership projects, which may include feasibility studies, environment impact studies, financial structuring and legal review in the pre-tender period.

The fund would bear up to 75 per cent of the costs of projects till the bidding stage an official source said.

Besides, the fund would also assist projects that closely support the best practices in PPP project identification and preparation.

Infrastructure projects, which qualify for the funding, could be revenue generating commercial projects, efficiency enhancement or cost-saving projects and non-revenue generating projects with hidden economic returns.

The fund with an initial corpus of Rs 100 crore can be scaled up through budgetary support, if need be. Envisaged as a revolving corpus, the fund would get replenished by fee earned from successfully bid projects.

According to estimates, India requires nearly $488 billion to build infrastructure like roads, power and ports to sustain high economic growth rate during the 11th Five Year Plan period.

India Infrastructure Project Development Fund would be administered by Empowered Institution headed by the additional secretary in the Department of Economic Affairs.

The Empowered Institution would select the projects that are eligible for availing of funding till pre-bidding stage. Besides, it would set the terms and conditions under which the funding will be provided and recovered.

Finance Minister P Chidambaram had earlier said that although finances were available, there were not enough infrastructure projects on the shelf in states.

He had noted that large private funds were looking at India with interest.

After the launch of two funds for infrastructure projects, including the $5 billion by Citigroup, Blackstone, IDFC and IIFCL combine, other similar initiatives are waiting to be launched in India.