||What does PPP in infrastructure
||Public Private Partnership (PPP) Project means a project
based on a contract or concession agreement, between a Government or a
statutory entity on the one side and a Private Sector Company on the other-side,
for investing in construction and maintenance of infrastructure asset
and / or delivering an infrastructure service.
||What is Public-Private- Partnership
The PPP database is collection of project information on PPP projects
under taken in India. The database maintains, on regular basis, data
initially on the following sectors:
The data for the same is collected and collated from various PPP nodal
agencies of the government and from project owners or investors.
- Health Care
- Urban Development
||What does the database
||The database contains general information about
the project like, location, sector, type of PPP project, status, , bidding
information (such as contract award method, contract signing date, financial
closure etc.), project benefits and costs, legal instruments and financial
information about investor holdings and, total debt and equity etc
The database captures all the PPP projects on the sectors below from 1996
in India and is updated regularly with any new development in the existing
and under-construction projects. The new projects are updated as and when
they are in the public domain. The database covers only those projects
that are approved by the Government of India, State governments or local
||Has the Central Government
formed any approval committee for PPP projects?
||The Cabinet Committee on Economic Affairs (CCEA)
in its meeting of 27th October, 2005 approved the procedure for approval
of public private partnership (PPP) projects. Pursuant to this decision,
a Public Private Partnership Approval Committee (PPPAC) was set up comprising
of the following:
The Committee would be serviced by the Department of Economic Affairs,
who has set-up a special cell for servicing such proposals. The Committee
may co-opt experts as necessary.
- Secretary, Department of Economic Affairs (in the Chair)
- Secretary, Planning Commission
- Secretary, Department of Expenditure;
- Secretary, Department of Legal Affairs ; and
- Secretary of the Department sponsoring a project.
||Has Central Government
provided any guidelines for appraisal/ approval of PPP projects?
||Different guidelines for different categories
of central sector PPP projects have been issued by the government from
time to time.
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
(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
in Central Sector
||How is the project
identified for appraisal/ approval?
||The sponsoring Ministry will identify the projects
to be taken up through PPPs and undertake preparation of feasibility studies,
project agreements etc. with the assistance of legal, financial and technical
experts as necessary.
||Does the government
extend financial support for PPP projects?
||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
||Has the government
provided any funds for the scheme?
||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.
||What is India Infrastructure
Project Development Fund?
||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% of the project development expenses.
On successful completion of the bidding process, the project development
expenditure would be recovered from the successful bidder.
||What is the purpose
of the IIPDF fund?
||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.
||What is Viability Gap
||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.
||How is the government
funding done under Viability Gap Funding (VGF)?
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.
VGF up to Rs. 100 crore for each project may be sanctioned by the Empowered
Institution subject to the budgetary ceilings indicated by the Finance
||What are the eligibility
criteria for getting support under the VGF scheme?
In order to be eligible for funding under VGF Scheme, a PPP project
should meet the following criteria:
(a) 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
-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.
-Provided that the Empowered Committee may, with approval of the Finance
Minister, add or delete sectors/sub-sectors from the aforesaid list.
||What is the procedure
for getting Viability Gap funding?
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
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
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
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
||When is VGF disbursed?
||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.
||How is the grant/subsidy
disbursed for the approved projects?
||(1) 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.
(2) The Empowered Institution releases the Grant to the Lead Financial
Institution as and when due, and obtain reimbursement thereof from the
(3) The Empowered Institution, the Lead Financial Institution and the
Private Sector Company enter into a Tripartite Agreement for the purposes
of this scheme. The format of such Tripartite Agreement is prescribed
by the Empowered Committee from time to time.
||What is the aim of
establishing India Infrastructure Finance Company (IIFC)?
||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.
||Has the government
given any guidelines for approval/ appraisal of PPP projects?
||Different guidelines for PPP projects below
Rs. 100 crore, above Rs 100 crore but below Rs. 250 crores and NHDP projects
above Rs. Rs. 250 crores but below Rs. 500 crores have been notified by
the government time to time.
||What is the applicability
of the guidelines issued by Finance Ministry?
||These guidelines apply to all PPP projects sponsored
by Central Government Ministries or Central Public Sector Undertakings
(CPSUs), statutory authorities or other entities under their administrative
control. The procedure specified herein will apply to all PPP projects
with capital costs exceeding Rs.100 crore or where the underlying assets
are valued at a sum greater than Rs.100 crore. For appraisal/ approval
of PPP projects involving a lower capital cost/ value, detailed instructions
are issued by the Department of Expenditure.
||Who are not covered
under these guidelines?
||Ministry of Defense, Department of Atomic Energy
and Department of Space are not covered under the purview of these guidelines.
||What is the procedure
for approval of Central sector PPP projects below Rs. 100 crore?
The sponsoring Ministry identifies the projects to be taken up through
PPPs and undertake preparation of feasibility studies, project agreements
etc, with the assistance of legal, financial and technical experts as
A Request for proposals (RFP) along with copy of all the agreements
that are proposed to be entered with the successful bidder is sent by
the Administrative Ministry to SFC/EFC for seeking approval before financial
bids are invited.
The proposal seeking clearance of SFC/EFC is circulated to all the members
of SFC/EFC in the format specified along with copies of all draft project
agreement and project report.
Planning Commission appraises the project proposal and forward its appraisal
Note to the Administrative Ministry.
Ministry of Law and any other Ministry/ Department involved will also
forward written comments to the Administrative Ministry within the stipulated
time period. The SFC/EFC takes a view on the Appraisal Note and on the
comments of different ministry and the Administrative ministry.
SFC/EFC either recommends the proposal for approval of the competent
authority (with or without modifications or requests the Administrative
Ministry to make necessary changed for further considerations of SFC/EFC.
Once cleared by the SFC/EFC, the project is put to the competent authority
||What is the procedure
for approval of PPP projects above Rs. 100 crore but less than Rs. 250
crore and project under NHDP costing Rs. 250 crore but less than Rs. 500
The Government vide notification No. 10/32/2006-inf dated April 2,
2007 modified the guidelines for approval as given under the notification
vide No.2/10/2004-Inf dated November 29, 2005.
Accordingly, RFP (Request for Proposals), i.e. invitation to submit
financial bids must include a copy of all the agreements that are proposed
to be entered into with the successful bidder. After formulating the
draft RFP, the Administrative Ministry would seek clearance of the SFC.
The proposal for seeking clearance of SFC is circulated to all members
of SFC in the format specified along with copies of all draft project
agreements and the Project Report within one week of receipt.
Planning Commission appraises the project proposal and forwards it's
Appraisal Note to the Administrative Ministry.
Ministry of Law and any other Ministry/Department involved also forward
written comments to the Administrative Ministry. The SFC takes a view
on the Appraisal Note and on the comments of different Ministries, along
with the response from the Administrative Ministry.
SFC either recommends the proposal for approval of the Committee or
requests the Administrative Ministry to make necessary changes for further
consideration of SFC.
Once cleared by the SFC, the project is put up for approval of the
Committee mentioned below. The Committee either recommends the proposal
for approval of the competent authority or requests the Administrative
Ministry to make necessary changes for further consideration of the
Committee. Once cleared by the Committee, the project is put up to the
competent authority for approval.
Financial bids are invited after approval of the competent Authority
has been obtained. The competent authority for each Project will be
the same as applicable for normal investment proposals costing more
than Rs.100 crore. However, pending approval of the Competent Authority,
financial bids can be invited after the approval/clearance by the Committee.
||For projects above
Rs. 100 crore but less than Rs. 250 crore who will approve/appraise the
||For appraisal of PPP projects of all sectors
of cost greater than Rs.100 crore but less than Rs.250 crore, a Committee
has been set up comprising of the following:
(a) Secretary, Department of Economic Affairs
(b) Secretary of the Ministry /Department sponsoring the project
||For projects above
Rs. 250 crore but less than Rs. 500 crore who will approve/appraise the
For appraisal of projects under NHDP of cost Rs.250 crore or more but
less than Rs.500 crore the Committee is as follows:
(a) Secretary, Department of Economic Affairs
(b) Secretary, DORTH
Initially the projects will be appraised by the Standing Finance Committee
(SFC). The composition of SFC is as follows:
|Secretary of the Administrative Ministry
|Joint Secretary of the concerned Division
|Representative of the Department of Legal Affairs
Representative of Planning Commission and any other Ministry/Department
are also invited, if required. SFC either recommends the proposal for
approval to the Committee as given above or requests the Administrative
Ministry to make necessary changes for further consideration of SFC.