Karnataka sets up project fund for infra projects

The Karnataka government has set up a fund for providing financial assistance to state agencies taking up infrastructure projects under the public-private partnership (PPP) model. The new fund, called the Karnataka Infrastructure Project Development Fund (KIPDF), has been created under the department of infrastructure.

The state government recently issued an order for setting up the fund. The fund will provide assistance for project development activities. To begin with, the fund will have a corpus of around Rs 5 crore.

“While encouraging PPPs, one of the constraints is inadequate shelf of bankable infrastructure projects that can be bid out to the private sector. Quality advisory services are fundamental to procuring affordable, value-for-money PPPs which require project development comprising of conceptualisation, preparation of pre-feasibility reports, detailed project report, techno-economic feasibility reports, advisory services for undertaking transaction among others,” the government order said.

The development of infrastructure projects from the concept to concessionaire takes 12-14 months and these projects require funds during the stage. The creation of the KIPDF would provide financial support for such project development activities, official sources said.

Karnataka is among the states where the Public-Private Partnership mode has become the fast track vehicle for implementing infrastructure projects (proposals as declared through the New Infrastructure Policy ’07).

The KIPDF’s primary objective would be to fund potential PPP projects’ project development expenses, including costs of engaging consultants and transaction advisors, thus increasing the quality and quantity of successful PPPs and allowing informed decision making by government.

The KIPDF will assist projects that closely support the best practices in PPP project identification and preparation.

The infrastructure department will come out with the detailed operational guidelines in due course. The detailed operational procedure pertaining to the operation of the KIPDF covering the composition of the fund, its role, the expenses covered, eligibility conditions funding sources, approval process and the organisational structures would be issued.

Presently, the focus areas for investment are the Railways, airports, ports, roads, urban infrastructure, energy, tourism and industrial infrastructure. The investment potential for all these areas is estimated at Rs 92,460 crore.