Cabinet okays proposal for Hybrid Annuity based PPP model

New Delhi, Jan 6 (IANS) The union cabinet on Wednesday approved a proposal for taking up Hybrid Annuity based Public Private Partnership (PPP) model under Namami Gange Programme that aims to reform the wastewater sector in the country.

“Hybrid Annuity based PPP model will now be adopted to ensure performance, efficiency, viability and sustainability,” an official statement said here.

“In this model, a part of the capital investment (up to 40 percent) will be paid by government through construction linked milestones and the balance through an annuity over the contract duration upto 20 years,” it added.

The decision was taken at the union cabinet meeting chaired by Prime Minister Narendra Modi.

Keeping in view the specialized nature of this model and to scale it up in future on sustainable basis, the government is establishing a Special Purpose Vehicle (SPV) to plan, structure, procure concessionaires, monitor implementation of such PPP projects and develop market for treated waste water through appropriate policy advocacy under overall guidance of National Mission for Clean Ganga (NMCG).

The SPV will be established under the Indian Companies Act 2013 for providing required governance framework and enabling functional autonomy.

The SPV would enter into a Tripartite Memorandum of Agreement (MoA) with participating state governments and concerned Urban Local Bodies (ULBs) for taking up individual projects.

These MoAs will aim at introducing reforms and regulatory measures for recovery of user charges on Polluters Pay principle, restrictions on usage of ground and fresh water for non-potable purposes through stricter monitoring and guidelines that promote reuse of treated wastewater.

Cabinet nod for credit guarantee fund for MUDRA Bank loans

The union cabinet on Wednesday approved the setting up of a credit guarantee fund for loans of Micro Units Development & Refinance Agency Ltd or MUDRA Bank.

The fund is expected to guarantee more than Rs.100,000 crore worth of loans to micro and small units in the first instance, the government said.

The cabinet meeting chaired by Prime Minister Narendra Modi also gave its nod to covert MUDRA Ltd to MUDRA Small Industries Development Bank of India (MUDRA SIDBI Bank) – a wholly owned subsidiary of Small Industries Development Bank of India (SIDBI).

Finance Minister Arun Jaitley in his budget speech for 2015-16 had said MUDRA Bank and a credit guarantee fund was proposed to be set up with a refinance corpus of Rs.20,000 crore and Rs.3,000 crore respectively.

Prior to the launch of the Pradhan Mantri MUDRA Yojana (PMMY) in April, 2015, MUDRA Ltd. was set up as a subsidiary of SIDBI in March, 2015.

The Reserve Bank of India (RBI) has allocated Rs 20,000 crore and the first tranche of Rs.5,000 crore has been received by MUDRA as refinance.

The credit guarantee fund is set up to guarantee loans given under Pradhan Mantri Mudra Yojana.

This is done to reduce the credit risk to banks, non-banking finance companies and others who are member lending institutions.

The guarantee would be provided on portfolio basis to a maximum extent of 50 percent of amount in default in the portfolio.

The National Credit Guarantee Trustee Company Ltd., a Government of India company that manages and operates various credit guarantee funds will be the fund Trustee.

According to the statement the MUDRA (SIDBI) Bank will undertake refinance operations and provide support services with focus on portal management; data analysis and other activities as specified by the government.

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