Tuesday, May 07, 2013

HYDERABAD METRO RAIL GETS VIABILITY GAP FUNDING

INN News Desk

A government-appointed committee headed by Department of Economic Affairs (DEA) Secretary Arvind Mayaram on Monday approved viability gap funding (VGF) of Rs. 1,458 crore for development of Hyderabad Metro Rail.

“The Empowered Committee headed by the DEA Secretary has accorded final approval for viability gap funding of Rs. 1,458 crore (12.35 per cent of total project cost of Rs. 11,814 crore) under the VFG scheme to the project from government of Andhra Pradesh for development of Hyderabad Metro Rail on DBFOT (toll) basis,” the Finance Ministry said in a statement.
VGF is typically provided in competitively bid projects. Under VGF, the Central government meets up to 20 per cent of capital cost of a project being implemented in public private partnership (PPP) mode by a Central Ministry, State government, statutory entity or a local body. The State government, sponsoring ministry or the project authority can pitch in with another 20 per cent of the project cost to make the projects even more attractive for the investors. 

The viability gap funding by the Centre will start flowing after the concessionaire L&T Metro Rail Hyderabad (L&TMRH) will spend its equity share of Rs.2,768 crore of the total project cost of Rs.12,132 crore.

HMR Managing Director N.V.S. Reddy informed that the funds will be released in proportion to the debt servicing by the concessionaire and most likely it will take up to a year’s time. He had attended the empowered high committee of officials drawn from the Finance Ministry, Planning Commission and Urban Development, at New Delhi, on Monday as the A.P. Government representative where the final clearance was given.

Mr. Reddy pointed out that the Centre had assured the VGF or 20 per cent of the project cost when the project was appraised to be taken up in the public, private partnership (PPP) mode itself and the three central agencies had noted the precise documentation done for the work.

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