Context:
Cabinet approved Viability Gap Funding (VGF) scheme for Offshore Wind Energy Projects
Viability Gap Funding:
- Grant provided to infrastructure projects that are economically feasible but fall short of financing.
- Nodal Ministry – Ministry of Finance
- Provided as a capital subsidy to attract the private sector players to participate in PPP projects
- Funds for the scheme are provided by the government’s budgetary allocation.
- Funding can also be provided by the statutory authority that owns the project asset.
- If the sponsoring Ministry/State Government intends to provide assistance over and above the stipulated amount under VGF, it will be restricted to a further 20% of the total project cost.
- Grants will only be available for infrastructure projects where private sector sponsors are selected through a process of competitive bidding.
Components of Viability Gap Funding Scheme:
- Sub scheme -1 –
- Focus on sectors such as Waste Water Treatment, Water Supply, Solid Waste Management, Health, and Education sectors, etc.
- Projects eligible to be financed under this category should have at least 100% Operational Cost recovery.
- Central Government would provide a maximum of 30% of the Total Project Cost (TPC) of the project as VGF and State Government/Sponsoring Central Ministry/Statutory Entity may provide additional support up to 30% of TPC.
- Sub scheme -2 –
- Supports demonstration/pilot social sector projects.
- Projects can be from various domains such as health and education sectors where there is at least 50% Operational Cost recovery.
- In such projects, the Central Government and the State Governments together provide up to 80% of capital expenditure and up to 50% of Operation & Maintenance (O&M) costs for the first 5 years.
- Central Government would provide a maximum of 40% of the TPC of the Project and also a maximum of 25% of the Operational Costs of the project in the first five years of commercial operations.
Source: PIB
Previous Year Question
Which one of the following links all the ATMs in India?
[UPSC Civil Service Exam – 2018 Prelims]
(a) Indian Banks’ Association
(b) National Securities Depository Limited
(c) National Payments Corporation of India
(d) Reserve Bank of India
Answer: (c)
