Government notifies increased financial support for central and state PPP projects

The Center has revamped and expanded the Infrastructure Project Development Fund program in India with the aim of providing financial assistance to cover the cost of transaction advisers and consultants engaged in the development of public-private partnership projects, According to a statement and notification to the official gazette by the Ministry of Finance on Friday, the corpus of this fund is Rs 150 crore for three years.

“PPPs are encouraged to bring private capital and efficiency into the execution and operation of infrastructure projects. Additionally, new programs and initiatives are being introduced to provide financial and technical support to the private sector, whenever needed,” the statement said.

As a central sector scheme, the India Infrastructure Project Development Fund Scheme (IIPDF Scheme) will assist in the development of quality PPP projects by providing the necessary financial support to the project sponsoring authorities, both at the central and government levels. States, to create a shelf of viable and bankable projects. PPP projects to realize the vision of modern infrastructure for the country.

The financing under the IIPDF program is in addition to the already operational program of financial support for PPPs in infrastructure (Reliability Gap Funding, or VGF Scheme) notified on December 7, 2020, by which infrastructure projects undertaken in PPP mode which are economically justified but commercially unviable are supported.

“A key step in structuring quality PPP projects is to provide quality advisory/consultancy services to Project Sponsoring Authorities (PSAs). However, procuring such services is a time-consuming and difficult process, which often results in delays in onboarding appropriate transaction advisors (TAs) or sub-optimal structuring of PPP projects,” the statement said.

“The features of the existing IIPDF, which was established in 2007, are improved and the fund is restructured as a central sector program with a total expenditure of Rs 150 crore for a period of three years from 2022-23 to 2024 -25″, as per notification to the official journal.

In her 2022 Union budget speech, Finance Minister Nirmala Sitharaman had said that to finance infrastructure needs, scaling up public investment will need to be complemented by large-scale private capital.

“Steps will be taken to improve the financial viability of projects, including PPPs, with the technical assistance and knowledge of multilateral agencies. Improving financial sustainability will also be achieved by adopting global best practices, innovative modes of financing and a balanced distribution of risk,” she said.

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