IIFCL sactions Rs 460 crore for development projects

New Delhi, June 19 (UNI) The India Infrastructure Finance Company Ltd, the special purpose vehicle for financing infrastructure, has sanctioned Rs 460 crore for various development projects in the country, IIFCL chairman S S Kohli today said.

The decision in this regard was taken in the Board of Directors meeting held last month, Mr Kohli told UNI.

Refusing to divulge further details about the projects, Mr Kohli said the infrastructure development of ports, roads and power generation projects are in the priorities list of the company.

The union government, in its budget for financial year 2005-06, had recommended Rs 10,000 crore loan limit for the IIFCL, out of which the company's Board of Directors, for the first time, has sanctioned Rs 458 crore for various development projects.

With the onset of economic liberalisation in the country, lack of development in various sectors, including power, airports, seaports, roads, was observed as the limiting factor. As the developmental projects in these sectors take long time, even banks and other financial institutions expressed their inability to fund them. Thus, the government planned an alternative to the problem and promoted a special company, IIFCL.

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 Special Economic Zones (SEZs), the infrastructure finance company will finance gas pipelines, international convention centres and other tourism projects.

Roads and bridges, railways, seaports, airports, inland waterways and other transportation systems, the power sector, urban transport, water supply, sewage, solid waste management and other physical infrastructure in areas would be financed by the special purpose vehicle.

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.

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 guaranteed by the Government of India. The extent of guarantees to be 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 Management 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 VJ RP RK1738