Tradable development rights on land or property may be offered to private sector participants of public private partnership (PPP) projects.
This forms part of various incentives to be given by the government to concessionaires, according to Tamil Nadu Infrastructure Development Rules notified in the gazette last week.
Exemption from payment or deferred payment of any tax/fees or refund or loan in lieu of payment of cesses, royalties, seigniorage or other statutory levies is another incentive that the government is to provide.
The Rules have been framed as part of the Infrastructure Development Act, 2012. To act as a nodal agency, a high-level Board, headed by Chief Minister, has been constituted and this came into effect on June 15.
The law was enacted to create an enabling environment for financing, design, construction, maintenance and operation of infrastructure projects, essentially meant to be executed through PPP mode, and provide for an institutional framework for identification, prioritisation and implementation of such projects.
Through an order also issued last week, the government has brought all PPP projects of over Rs. 10 crore under the ambit of the Act.
Financial support
According to the Rules, PPP projects may be provided financial support, tapping the Tamil Nadu Infrastructure Development Fund. An allocation of Rs. 1,000 crore was made in the budget for 2012-2013.
The proposed support can be in the form of viability gap funding, says a senior policymaker. For instance, a road project, in the absence of toll levy, may not be viable, even though it is technically feasible. Under such circumstances, the support can be provided by the Board. Also, the support can be in other forms: operational grants or annuity payments for a specified period in the life of a project or equity investment in the entity implementing a given project or loans.
The financial support under the fund for a particular project would not exceed 20 per cent of the total cost of the project concerned. However, it can go up to 40 per cent in cases where the Board is the procuring entity and sponsoring agency.
The Board, comprising Finance Minister and a host of officials, including the Chief Secretary and Secretaries in-charge of Finance and Industries, can be designated as the procuring agency for multi-sector projects.
There are 21 items listed in the Schedule-I of the Act for infrastructure development projects. Drinking water supply, power generation/distribution, development of minor minerals, fisheries and agricultural marketing and post-harvest infrastructure are among the sectors identified.
Ordinarily, the Board would like to play the role of a facilitator, rather than an executing or a sponsoring agency, clarifies the policymaker.
Also, the support under the Fund can be provided only after opportunities to secure government support in the conventional way have been exhausted.
Tenure
The Board’s Executive Committee, headed by Chief Secretary, can have five non-official experts from the fields such as banking, finance, economics, commerce, industry, environment, law and technology. The tenure of the experts will be three years. The reappointment of the experts is allowed for another tenure. Before the expiry of their tenure, they can be removed by the Chief Minister-Chairperson of the Board, the Rules add.
