Centre’s VGF scheme to fund infra projects of up to Rs 200 cr

The Finance Ministry has announced the Viability Gap Funding (VGF) scheme for selected infrastructure projects. The Empowered Committee (EC) led by the economic affairs secretary will sanction funding up to Rs 200 crore (2 billion), while projects which require over Rs 200 crore (2 billion) would see approval by EC, with the Finance Minister’s consent, according to media reports.

The VGF scheme will be known as the Scheme for Financial Assistance to Public-Private Partnerships (PPPs).

The report further stated that the scheme will be implemented with immediate effect. Eligibility of a project will be implemented by a private sector company, said the report. It further stated the government or a statutory entity would select the private sector company through an open competitive bidding process.

The projects that belong to sectors such as water supply as well as solid waste management, the VGF amount will be equivalent to the lowest bid for the grant of the capital. This will account for 30% of the project's total cost. For all the other eligible sectors, the amount of VGF shall be equivalent to the lowest bid for the grant of capital subject to a maximum of 20% of the project’s total cost.

Other members of the EC will include CEO of NITI Aayog, line ministry’s secretary, expenditure secretary, and the joint secretary in the Department of Economic Affairs.