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VGF for unviable roads under BOT

VGF for unviable roads under BOT

In the midst of widespread protests and growing concerns as to the extent to which 'viable', toll-based road projects can work under PPP, central and state governments have agreed on a new funding model for national highways that are built and maintained by state government agencies.

The new scheme involves development of roads on BOT instead of the earlier system of cash contracts. Under the new model, viability gap funding (VGF) will be provided by the Centre for stretches that are financially unviable.

As per the policy, the government can give up to 40 per cent of the project cost in the form of VGF for all national highway projects undertaken on BOT mode.

The state governments will tender the projects and supervise the work. The Madhya Pradesh government will implement the first project of 200 km, while, four others in Rajasthan and one in Punjab have also obtained in-principle clearance.

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