The India Infrastructure Finance Company Ltd, the special purpose vehicle for financing infrastructure, will fund the projects in the Special Economic Zones (SEZ) as well, IIFCL Chairman S S Kohli has said. However, the IIFCL will finance only such projects which are implemented through a project company set up on a on-recourse basis.
''The total lending by the IIFCL to any project company shall not exceed 20 per cent of the total project cost. Loans will be disbursed in proportion to debt disbursements from the financial institutions,'' Mr Kohli said.
Besides the SEZs, the infrastructure finance company will finance gas pipelines, international convention centres and other tourism projects. The other projects which the special purpose vehicle will finance include roads and bridges, railways, seaports, airports, inland waterways and other transportation systems. The projects in the power sector, urban transport, water supply, sewage, solid waste management and other physical infrastructure in areas would be financed.
Mr Kohli said the government has recognised that there is a large deficit in the availability of physical infrastructure across different sectors.''This is hindering economic development'', he said. The development of infrastructure requires debt of longer maturity to supplement the debt funds presently available. Such debt is usually not available because of the absence of benchmark rates, asset-liability mismatch of the tenor of debt and high cost of long term debt.
IIFCL, itself is to be funded through long-term debt raised from the open market. This debt can be rupee debt raised through suitable instruments. IIFCL would ordinarily raise debt of maturity of 10 years and beyond. It would also tap the institutional debt from the World Bank and the Asian Devlopment Bank. The foreign currency debt through the external commercial borrowings would be raised.
The borrowings of IIFCL may be guarnateed by the Government of India. The extent of guarnatees to the provided shall be set at the beginning of each fiscal year by the Ministry of Finance, within the limits available under the Fiscal Responsibility and Budget Managemnt Act.
Mr Kohli said the IIFCL shall finance only commercially viable projects which may include those that will become viable after receiving the viability gap under a government scheme.
UNI PC VJ RN1456
