Cupboard revamps PPP schemes for social sector

Tribune News Service

New Delhi, November 11

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the continuation and revamping of 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 cr.

The revamped scheme is mainly related to introduction of following two sub-schemes for mainstreaming private participation in social infrastructure, said an official news release after the CCEA meeting chaired by PM Narendra Modi.

Sub scheme -1 is for projects facing bankability issues and poor revenue streams in areas such as waste water treatment, water supply, solid waste management, health and education sectors, etc. The projects eligible under this category should have at least 100 per cent operational cost recovery. The Central Government will provide a maximum of 30 per cent of the total project cost (TPC) as VGF and the other side may provide equivalent additional support.

Sub scheme-2 will support demonstration/pilot social sectors projects. The projects may be from health and education sectors where there is at least 50 per cent operational cost recovery.

In such projects, the Central and state governments together will provide up to 80 per cent of capital expenditure and up to 50 per cent of Operation & Maintenance (O&M) costs for the first five years. The Central Government will provide a maximum of 40 per cent of the project’s TPC. 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.

Since the inception of the scheme, 64 projects have been accorded ‘final approval’ with TCP of Rs 34,228 crore and VGF of Rs 5,639 crore. Till the end of 2019-20 fiscal, VGF of Rs 4,375 crore has been disbursed.

The aim 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/socially essential projects commercially viable. The scheme would be beneficial to the public at large as it would help in creation of the Infrastructure for the country, stated the official news release.

The new scheme will come into force within one month of the approval of the Cabinet. Proposed amendments under the revamped VGF scheme would be suitably incorporated in the guidelines and all steps will be taken up for the promotion of the revamped VGF and in monitoring of the supported projects, it added. The revamping is expected to attract more PPP projects and facilitate private investment in the social sectors.

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