Monday, July 7, 2008

VGF for metros to be increased to 50 per cent

Project Monitor reports "A high-level sub-committee on infrastructure has proposed an increase in viability gap funding (VGF) for metro projects by 30 per cent (from 20 per cent now to 50 per cent). A proposal to this effect is already under consideration with the finance ministry for metro projects.

The private players will only be allowed to enjoy the benefits of higher VGF only if they follow stricter guidelines. The urban development ministry is working on stricter guidelines the companies will have to follow at the time of preparing detailed project reports.

Moreover, projects will be scrutinised by government departments. All city authorities will have to mandatorily set up unified metro transport authorities that will ensure seamless disbursal of funds provided under the VGF policy. At present, the Centre provides 20 per cent loan to such projects as soft loans and the remaining 80 per cent cost is shared by the state government and the private partners."