FM, Plan panel at odds over infrastructure SPV

Ministry opposes as panel wants direct lending route

The finalisation of the proposed Special Purpose Vehicle to provide long-term debt for infrastructure projects has been delayed due to differences between the Planning Commission and the finance ministry over the pattern of lending by the SPV.

Senior government officials said the plan panel was in favour of allowing the SPV to undertake direct lending at specified interest rates and for a specified tenure.

Besides, it wanted to include subordinate debt and mezzanine financing under the ambit of the SPV which is proposed through the establishment of a new non-banking finance company.

On the other hand the ministry wanted to include refinance under the SPV's ambit, while taking up subordinate debt, mezzanine financing and venture capital funding for infrastructure projects later.

North block was of the view that the SPV would not have the expertise to handle subordinate debt. "The ministry thinks that subordinate debt should be dealt with separately and should be available as an independent finance option for infrastructure projects," an official said.

Officials pointed out that the thinking in the ministry was that a complete investment portfolio should be available for infrastructure project including the SPV for long term debt, viability gap funding, venture capital and subordinate debt.

In a cabinet, the finance ministry had earlier proposed the establishment of India Infrastructure Finance Company Ltd, a wholly-owned government company under the Companies Act, which was to have an authorised capital of Rs 1,000 crore and an initial paid-up of Rs 10 crore.

With the help of a government guarantee, the company is proposed to tap the domestic and the international markets to raise funds apart from tapping multilateral agencies for debt.

The government had proposed to guarantee borrowings to the tune of Rs 10,000 crore during the current fiscal.The project appraisal and viability would be assessed by an inter-institutional group.