| |
|
Question : What is PPP |
|
|
Ans : Public-private partnerships (PPP) refer to contractual agreements formed between a public agency and private sector entity that allow for greater private sector participation in the delivery of Infrastructure as well as Social Sector Projects |
|
| |
|
Question : What is Project Development |
|
|
Ans : A ) Efforts made by Sponsoring Authority in identifying and structuring of Project which includes carrying out the feasibility studies, financial structuring, legal reviews (including environment studies) and development of project documentation, including concession agreement, commercial assessment studies etc. |
|
| |
|
Question : VGF GAP Funding |
|
|
Ans : VGF: Viability Gap Funding means a grant one-time provided by the Public Sector (Central Government / State Government) for Financial Support to PPPs in Infrastructure, with the objective of making a project commercially viable |
|
| |
|
Question : What do you mean by Transaction Advisors |
|
|
Ans : Consultants hired through a transparent system of procurement by the sponsoring authorities to assist them in designing the project and/or providing technical, financial and legal input for the project design, and providing advice for the management of the process of procuring the private sector partner for the PPP project |
|
| |
|
Question : Has government of India provided any guidelines for appraisal approval of PPP projects |
|
|
Ans : Different guidelines for different categories of central sector PPP projects have been issued by the government from time to time. These are: a. Guidelines for formulation, appraisal and approval of Public Private Partnership (PPP) Projects costing less than Rs.100 Crore b. Guidelines for formulation, appraisal and approval of Public Private Partnership (PPP) Projects (i) Of all sectors costing more than Rs.100 crore and less than Rs.250 crore (ii) Under NHDP costing Rs.250 crore or more and less than Rs.500 crore c. Procedure for approval of PPP Projects and Guideline for formulation, appraisal and approval of Public Private Partnership (PPP) Projects |
|
| |
|
Question : Does the government extend financial support for PPP projects |
|
|
Ans : The Scheme for Financial Support to Public Private Partnerships (PPPs) in Infrastructure. (Viability Gap Funding Scheme) of the Government of India provides financial support in the form of grants, one time or deferred, to infrastructure projects undertaken through public private partnerships with a view to make them commercially viable. It is a Plan Scheme administered by the Ministry of Finance. Suitable budgetary provisions are made in the Annual Plans on a year-to- year basis for the scheme. |
|
| |
|
Question : Has the government provided any funds for the scheme |
|
|
Ans : To address the financing needs of these projects, various steps have been taken like setting up of India Infrastructure Finance Company and launching of a Scheme to meet Viability Gap Funding (VGF) of PPP projects. Setting up of infrastructure funds are also being encouraged and multilateral agencies such as Asian Development Bank have been permitted to raise Rupee bonds and carry out currency swaps to provide long term debt to PPP projects. |
|
| |
|
Question : What is India Infrastructure Project Development Fund |
|
|
Ans : For providing financial support for quality project development activities for PPP projects to the the Central and the State Governments and local bodies, Scheme and Guidelines of of India Infrastructure Project Development Fund (IIPDF), have been notified The IIPDF would assist ordinarily up to 75 per of the project development expenses. On successful completion of the bidding process, the project development expenditure would be recovered from the successful bidder. |
|
| |
|
Question : What is the purpose of the IIPDF fund |
|
|
Ans : The procurement costs of PPPs and particularly the costs of transaction advisors, are significant and often pose a burden on the budget of the Sponsoring Authority. Department of Economic Affairs (DEA) has identified the IIPDF as a mechanism through which Sponsoring Authority will be able to source funding to cover a portion of the PPP transaction costs, thereby reducing the impact of costs related to procurement on their budgets. From the Government of India s perspective, the IIPDF must increase the quality and quantity of bankable projects that are processed through the Central or States project pipeline. |
|
| |
|
Question : What is Viability Gap Funding scheme |
|
|
Ans : The scheme aims at supporting infrastructure projects that are economically justified but fall short of financial viability. Support under this scheme would be available only for infrastructure projects where private sector sponsors are selected through a process of competitive bidding. The total Viability Gap Funding under this scheme will not exceed twenty percent of the Total Project Cost; provided that the Government or statutory entity that owns the project may, if it so decides, provide additional grants out of its budget, but not exceeding a further twenty percent of the Total Project Cost. |
|
| |
|
Question : How is the government funding done under Viability Gap Funding |
|
|
Ans : The government will provide a Viability Gap Funding (VGF) which shall not exceed 20 per cent of the Total Project Cost; provided that the Government or statutory entity that owns the project may, if it so decides it will provide additional grants out of its budget, but not exceeding a further 20 per cent of the Total Project Cost.
VGF under this scheme will normally be in the form of a capital grant at the stage of project construction. Proposals for any other form of assistance may be considered by the Empowered Committee and sanctioned with the approval of Finance Minister on a case-to-case basis.
|
|
| |
|
Question : What are the eligibility criteria for getting support under the VGF scheme |
|
|
Ans : The project should be implemented i.e. developed, financed, constructed, maintained and operated for the Project Term by a Private Sector Company to be selected by the Government or a statutory entity through a process of open competitive bidding; provided that in case of railway projects that are not amenable to operation by a Private Sector Company, the Empowered Committee may relax this eligibility criterion.
(b) The PPP Project should be from one of the sectors mentioned above (See question 4)
(c) The project should provide a service against payment of a pre-determined tariff or user charge.
(d) The concerned Government/statutory entity should certify, with reasons:
That the tariff-user charge cannot be increased to eliminate or reduce the viability gap of the PPP
That the Project Term cannot be increased for reducing the viability gap; and
That the capital costs are reasonable and based on the standards and specifications normally applicable to such projects and that the capital costs cannot be further restricted for reducing the viability gap. |
|
| |
|
Question : What is the procedure for getting Viability Gap funding |
|
|
Ans : Project proposals may be posed by a Government or statutory entity which owns the underlying assets. The proposals shall include the requisite information necessary for satisfying the eligibility criteria specified above.
Projects based on standardized/model documents duly approved by the respective Government would be preferred. Stand-alone documents may be subjected to detailed scrutiny by the Empowered Institution.
The Empowered Institution will consider the project proposals for Viability Gap Funding and may seek the required details for satisfying the eligibility criteria.
Within 30 days of receipt of a project proposal, duly completed as aforesaid, the Empowered Institution will inform the sponsoring Government/statutory entity whether the project is eligible for financial assistance under this Scheme. In case the project is based on standalone documents (not being duly approved model/standard documents), the approval process may require an additional 60 (sixty) days. In the event that the Empowered Institution needs any clarifications or instructions relating to the eligibility of a project, it may refer the case to the Empowered Committee for appropriate directions.Notwithstanding the approvals granted under this scheme, projects promoted by the Central Government or its statutory entities are approved and implemented in accordance with the procedures specified from time to time.In cases where viability gap funding is budgeted under any on-going Plan scheme of the Central Government, the inter-se allocation between such on-going scheme and this scheme is determined by the Empowered Committee.
|
|
| |
|
Question : When is VGF disbursed |
|
|
Ans : The VGF is disbursed only after the private sector company has subscribed and expended the equity contribution required for the project and is released in proportion to debt disbursements remaining to be disbursed thereafter. |
|
| |
|
Question : How is the grant-subsidy disbursed for the approved projects |
|
|
Ans : A Grant under the VGF scheme is disbursed only after the Private Sector Company has subscribed and expended the equity contribution required for the project and is released in proportion to debt disbursements remaining to be disbursed thereafter. |
|
| |
|
Question : is the aim of establishing India Infrastructure Finance Company |
|
|
Ans : The need for providing long-term debt for financing infrastructure projects that typically involve long gestation periods is imminent since debt finance for such projects should be of a sufficient tenure that enables cost recovery across the project life. Indian capital markets, however, are deficient in long-term debt instruments. Therefore IIFC is set-up to bridge this gap. |
|