The Viability Gap Funding (VGF) scheme was notified by the Ministry of Finance under which various infrastructure projects will be selected for financial support to provide a boost to the sector. According to the VGF scheme, the Empowered Committee (EC) chaired by the economic affairs secretary will sanction a funding amount of up to Rs 200 crore, while projects requiring more than Rs 200 crore would be approved by the Empowered Committee, after the approval from the Minister of Finance. The VGF scheme will be known as the ‘Scheme for Financial Support to PPPs’ (Public-Private Partnerships) in the infrastructure sector.
This will be a central sector scheme and administered by the Finance Ministry. The updated viability gap funding scheme will come into force with immediate effect, according to notifications from the Ministry of Finance. Regarding the eligibility, the project will be implemented by a private sector company to be selected by the government or a statutory body through an open competitive bidding process.
✅Boosting private sector investment in Social Infrastructure through revamped Viability Gap Funding Scheme – Rs 8100 cr
— Ministry of Finance (@FinMinIndia) December 11, 2020
For the social sector projects, including water supply and solid waste management, the viability gap fund amount will be equivalent to the lowest bid for the grant of capital. This will be subject to a maximum of 30 per cent of the project’s total cost. For the projects belonging to all other eligible sectors, the financial support amount of the viability gap fund will be equivalent to the lowest bid for the grant of capital subject to a maximum of 20 per cent of the project’s total cost.