Q. Consider the following statements regarding Viability Gap Funding (VGF):
1. VGF is provided with the objective of making a PPP project commercially viable.
2. The total Viability Gap Funding cannot exceed twenty percent of the Total Project Cost(TPC).
3. VGF is limited to projects concerning economic infrastructure.
Which of the above statements is/are correct?
Answer: C
Notes:
About Revamped Viability Gap Funding Scheme:
The Cabinet Committee on Economic Affairs has approved Continuation and Revamping of the Scheme for Financial Support to Public Private Partnerships (PPPs) in Infrastructure Viability Gap Funding (VGF) Scheme till 2024-25 with a total outlay of Rs. 8,100 crore.
The new scheme will have two components:
- The sub-scheme-1 would cater to social sectors such as waste water treatment, water supply, solid waste management, health and education sectors, which often face bankability issues on account of poor revenue streams.
- The projects eligible under the sub-scheme-1 should have at least 100 per cent operational cost recovery.
- The central government will provide a maximum of 30% of the total project cost (TPC) of the project as VGF. State government, sponsoring central ministry or statutory entity may provide an additional support up to 30% of TPC.
- The sub scheme-2 will support demonstration or pilot social sectors projects. The projects may be from health and education sectors where there is at least 50% operational cost recovery.
- In such projects, central and state governments together will provide up to 80 per cent of capital expenditure and up to 50 per cent of operation and maintenance (O&M) costs for the first five years.
- The Centre will provide a maximum of 40% of the TPC of the project.
- The government has revamped the viability gap funding (VGF) scheme for encouraging investment in social as well as economic infrastructure projects.
Source: ForumIAS
