Continuation, revamping of financial support to PPPs in Infra VGF scheme get Cabinet nod

New Delhi: The Cabinet Committee on Economic Affairs on Wednesday approved the continuation and revamping of the scheme for financial support to the Public Private Partnerships (PPPs) in Infrastructure Viability Gap Funding (VGF) Scheme till 2024-25, with a total outlay of Rs 8,100 crore.

Addressing a press conference after the Cabinet meeting, along with Union Finance Minister Nirmala Sitharman, Information and Broadcasting Minister Prakash Javadekar said the revamped scheme is mainly related to introduction of two sub-schemes (Sub scheme -1 and Sub scheme -2) for mainstreaming private participation in social infrastructure.

The Cabinet meeting, chaired by Prime Minister Narendra Modi, decided that the sub scheme-1 would cater to social sectors such as Waste Water Treatment, Water Supply, Solid Waste Management, Health and Education sectors.

These projects face bankability issues and poor revenue streams to cater fully to capital costs. The projects eligible under this category should have at least 100 per cent Operational Cost recovery.

The Central government will provide maximum of 30 per cent of Total Project Cost (TPC) of the project as VGF and the State Government/Sponsoring Central Ministry/Statutory Entity may provide additional support up to 30 per cent of TPC.

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 government and the state governments together will provide up to 80 per cent of capital expenditure and up to 50 per cent of Operation and Maintenance (O&M) costs for the first five years.

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