Home FAQ Policies/Rules/Schemes India Infrastructure Project Development Fund (IIPDF)
India Infrastructure Project Development Fund (IIPDF)
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What It is :

GoI has established India Infrastructure Project Development Fund with 100 crore revolving corpus. It has been established with a view that most PPP projects require specialist support to ascertain project viability, feasibility and other preparatory works which need to be funded by the sponsoring department.

Provision has been made to provide upto 75% of total project development cost from GoI as long as there is a commitment from the sponsoring authority to bring in the balance 25%. Also in such project sponsoring agency/department/state can give additional 20% of the project cost VGF support.

 

Project development funding, ordinarily, will be an interest free financial assistance to meet the project development expenses. This is expected to be recovered from the successful private sector partner on award of the project. The Sponsoring Authority will reimburse the IIPDF, the project development expenses along with a fee up to 40% of the funding as provided below. The Sponsoring Authority must provide a plan for the same.

(i) Revenue Generating Commercial Projects (Concession/ BOOT or its variants/Lease contracts): In case of revenue generating projects proposed to be implemented through private sector investments, the MFC must include a plan for recovery of the IIPDF amount with a success fee of 40%.

(ii) Efficiency Enhancement / Cost Savings Projects (Management or Service contracts or Engineering, Procurement and Construction (EPC) contracts with limited period performance based O&M contracts): Where there is no or low private sector investment, the plan for recovery of project development expenses will be with a success fee of 25% .

(iii) Non-revenue generating projects with high economic returns (e.g. Sewerage System): In case of project undertaken in PPP formats based on Economic Returns considerations, project development funding may be considered merely as an interest free financial assistance to the project, to be repaid without any success fee, by the government.


How to get it :

Funding by the IIPDF will be considered only if the following requirements are met:

1. The funding is used on a single project, which is approved by the Empowered Institution.

2. Funding is required for the payment of transaction advisors appointed by the Sponsoring Authority, usually in a two-phase appointment: the first phase is the preparation of the pre-feasibility study and its subsequent approval by the EI, and the second phase is the procurement of the PPP in compliance with these Guidelines.

3. The funding by IIPDF will be used for phase two funding of transaction advisors, that is, after EI’s approval for the MFC, based on the pre-feasibility study, and where the transaction advisors are paid according to fixed milestone deliverables.

4. In order to achieve the aforesaid objectives, PPP Cell will, inter alia, screen identified

proposals for conducting detailed feasibility studies. For this purpose, the Sponsoring Authority shall prepare a MFC with respect to each such proposal. The MFC would provide justification for undertaking detailed feasibility studies to be taken up for financing out of the corpus of the Fund in the prescribed pro-forma.

5. The MFC shall contain the financial details of the project. Ordinarily, three types of projects can be posed for funding under the IIPDF:

(i) Revenue Generating Commercial Projects (Concession/BOOT or its variants/Lease contracts): A project FIRR of 20% or more on the private sector investment should be demonstrated. If the FIRR is below 20% even with VGF of up to 40% (maximum of 20% from VGF Scheme of GOI and 20% from the Sponsoring Authority) then the Project shall not ordinarily be presented before the EI.

(ii) Efficiency Enhancement / Cost Savings Projects (Management or Service contracts or Engineering, Performance based O&M contracts): Where there is no or low private sector investment, the financial savings/enhanced revenues should ordinarily be able to recover payouts by government within eight to ten years of completion of the project. Annuity based project would also be covered under this category.

(iii)Non-revenue generating projects with high economic returns (e.g. Sewerage System): In case of project undertaken in PPP formats based on Economic Returns considerations, the project eligibility will be based on sector preferences to be established by the EI and would be based on annuity payments by the sponsoring authority.

6. The MFC shall further state the cost likely to be incurred, the duration over which the same is to be incurred and how the same is perceived to be recovered by the sponsoring authority.

7. Proposals that do not envisage VGF can also be submitted for funding.

8. Proposals for funding under these Guidelines would cover the entire gamut of PPP projects, i.e. BOT (Toll), BOT (Annuity), long term management contracts etc. The decision of the Empowered Institution about the eligibility of a project shall be final.

Last Updated on Wednesday, 03 December 2008 13:54