NEW DELHI:In a bid to push public-private partnership (PPP) in health, education and water supply projects, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday decided to extend financial support in the form of viability gap funding (VGF) to the development of social infrastructure.
The Centre currently provides VGF support of 20 per cent to PPP infrastructure projects in the economic sector while such support is unavailable to the social sector.
In its meeting on Wednesday, the CCEA approved the continuation and revamping of the scheme till 2024-25 with a total outlay of Rs 8,100 crore.
“This would cater to social sectors such as waste water treatment, water supply, solid waste management, health and education sectors etc. These projects face bankability issues and poor revenue streams to cater fully to capital costs,” said an official statement.
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, the sponsoring Central ministry or the statutory entity may provide additional support up to 30 per cent of the TPC.
The revamp to the scheme, also including a sub scheme, will support demonstration or 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 Centre 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.
The Central government will provide a maximum of 40 per cent of the TPC of the project. In addition, it may provide a maximum of 25 per cent of operational costs of the project in first five years of commercial operations.
Since the inception of the scheme, 64 projects have been accorded ‘final approval’ with Total Project Cost of Rs 34,228 crore and VGF of Rs 5,639 crore. Till the end of financial year 2019-20, VGF of Rs 4,375 crore has been disbursed.
An official statement said that the aim of the scheme 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 or socially essential projects commercially viable.
The scheme would be beneficial to public at large as it would help in creation of the infrastructure for the country.
Source: IANS
