Six months after the Centre created a refinance window for through the India Infrastructure Finance Corporation Ltd (IIFCL), the facility is yet to find any takers. The finance ministry has therefore begun looking for fresh financing alternatives to fund infrastructure projects bid through the public-private partnership (PPP) route. Simultaneously, a review of the bidding system for PPP projects is also on the cards to make it faster, easier and more transparent.
?The refinance window through IIFCL has not helped, as projects are still being bid out. Given the situation, we feel there is need to look at other options to boost spending in infrastructure,? a finance ministry official told FE. New funding measures for the sector are likely to be a part of Budget 2009-10, the official said.
Increased spending on infrastructure projects has been the UPA?s key mantra to spur the flagging economy. As part of the stimulus packages announced in December and January, IIFCL was authorised to raise Rs 30,000 crore through tax-free bonds to refinance bank lending of longer maturity to eligible infrastructure projects.
IIFCL has so far raised Rs 10,000 crore, but hasn?t disbursed even one paisa as the funds can be used only for new projects. While bids have now been invited for nearly 40 highway projects, they are expected to be awarded only by August.
?Industry has been pointing out that IIFCL?s refinance window will only be successful if existing infrastructure projects are also allowed access to it. Currently, only new projects that have achieved financial closure since January 2009 are eligible,? explained Feedback Ventures chairman Vinayak Chatterjee.
Meanwhile, to build a shelf of bankable PPP projects, the government is also expected to review and simplify the entire bidding system and concession documents. ?The pipeline of infrastructure projects will be reappraised, made more robust. Where necessary, policy and procedures will be calibrated to give a boost to infrastructure spending,? finance minister Pranab Mukherjee had said last week.
Additionally, to ensure speedier implementation, the government is considering a proposal to put in place a monitoring mechanism consisting of officials from various administrative ministries.