Finance minister clears 9 state-level highways

State governments are now launching public-private partnership (PPP) projects for highways. Under the viability gap funding (VGF) scheme of the finance ministry, four states are offering nine highway projects worth Rs11,596.84 crore spanning 1,226 km.

According to the ministry of finance, proposals for nine road projects from the governments of Andhra Pradesh, Uttar Pradesh, Maharashtra, and Bihar were approved by the empowered committee under the scheme for financial support to PPP in infrastructure on Thursday.

The total VGF to the private sector in all the nine projects is to the tune of Rs2,295.06 crore.

“These projects are at an advanced stage of bidding/construction and are expected to result in disbursal of about Rs500 crore from the government of India during the current financial year 2012-13,” said a finance ministry note.

The VGF scheme under the aegis of the ministry is, aimed at those projects that are socially desirable but commercially not viable. The scheme aims at funding the state-level infrastructure projects.

The scheme was devised in 2005. The extent of the VGF granted may go up to 20% of the total cost of the project. A competitive bidding is done and projects are awarded to the private participants on the basis of the VGF quoted.

In a move aimed at encouraging public-private partnerships in hospitals and schools and colleges, the finance ministry has also categorised capital spending on them under infrastructure. With the new status, they are also eligible for viability gap funding.