Viability Gap Fund
The Department of Economic Affairs (DEA) in India offers Viability Gap Funding (VGF) for infrastructure projects that will be implemented under a public–private partnership (PPP) mode. Projects are eligible if they lack financial viability but are economically justified. By covering part of the project expenditures through FGV, the DEA aims to increase private sector participation in developing and financing infrastructure projects under PPP mode. The VGF covers up to 20 per cent of the total costs of an eligible project and is provided as a capital grant at the stage of project construction.
To be eligible, PPP projects have to be based on a contract or concession agreement between a government or statutory entity and a private sector company for the delivery of infrastructure services that are financed through predetermined user charges or tariffs.
Eligible projects and transactions
Infrastructure projects with minimum project costs of INR 27.5 billion (USD 420 million). VGF is awarded to project companies that have been selected through an open, transparent and competitive bidding process and that are responsible for the financing, construction, maintenance and operation of the project during the contract period.
VGF recipient has to be private-sector owned: at least 51 per cent of subscribed and paid up equity needs to be owned and controlled by a private entity.