Friday, June 6, 2008

Insight on ‘India Infrastructure Project Development Fund’

The Union Finance Minister in his Budget Speech for 2007-08 announced in the Parliament the setting up of a Revolving Fund with a corpus Rs. 100 crore to accelerate the process of project preparation.

Ministry of Finance has made the scheme and guidelines for India Infrastructure Project Development Fund.

The India Infrastructure Project Development Fund provides financial support for quality project development activities to the States and the Central Ministries with initial contribution of Rs. 100 crore. Although it is envisaged as a revolving fund and would get replenished by the reimbursement of ‘investment’ through success fee earned from successfully bid projects, should there be a need, it can be supplemented in subsequent years through budget support. The IIPDF would assist ordinarily up to 75% of the project development expenses. The assistance from IIPDF would ordinarily be in the form of interest free loan. On successful completion of the bidding process, the project development expenditure would be recovered from the successful bidder.

The memorandum for consideration is also attached which asks for the details of the project to be funded, technical information, legal, social and environmental aspects, Financial Analysis details etc.

The IIPDF Scheme aims to put in place a mechanism to fund potential Public Private Partnership projects’ project development expenses including cost of engaging consultants and transaction advisor, thus increasing the quality and quantity of successful PPPs and allowing informed decision making by the Government based on good quality feasibility reports. The IIPDF Scheme will assist projects that closely support the best practices in PPP project identification and preparation

The Guidelines are here.