National Mineral Policy 2006 - Department of Mines

(b)Scheme for financing viable infrastructure projects through a SPV called theIndia Infrastructure Finance Company Limited (IIFCL) notified by theMinistry of Finance, Department of Economic Affairs vide O.M. No.10/12/2005-INF dated 4 January 2006. This scheme provides longer-term debtfor financially viable projects, including those that have received capital grantunder the Viability Gap Funding Scheme described in (a) above.INSTITUTIONAL FRAMEWORK4.30 For planning and promoting the development of mine-related infrastructure it wouldbe necessary to put in place an appropriate institutional framework. In the major miningstates we already have mineral development corporations, which are at present involved inprospecting and mining operations. It is necessary to enlarge the mandate of thesecorporations to include development financing and promotion of mining infrastructureprojects and rename them as Mineral Infrastructure Development and Finance Corporations(MIDFICs). 2 Further, state governments should be encouraged to divest from thesecorporations so that they become joint sector organisations, with participation from miningcompanies and financing institutions, commercial banks, and non-banking financialcompanies (NBFCs).4.31 The MIDFICs would take up mining infrastructure projects by inter alia promotingimplementing entities in the form of JVs/SPVs. In appropriate cases, the MIDFICs couldmeet their bridge financing and/or viability gap funding needs either from the Viability GapFunding Scheme of the Ministry of Finance or from the MDF of the state governmentconcerned and further tie up loans from the financial institutions. Longer term debt forfinancially viable projects would also be available for the purpose from IIFCL. TheCommittee also recommends that consideration should be given to an alternative arrangementwhereby allocations would be made to the Ministry of Mines to enable it to allocate fundsdirectly to the MIDFICs for undertaking mining infrastructure projects. In order to facilitate2In the past, there has been a tendency in some states, in the context of parties expressing an interest intaking up prospecting and exploration activity, for the state government to require the party to enter into aJV arrangement with that state’s Mining Corporation. In most cases, the parties are reluctant to enter intosuch JVs and there have been instances in which the requirement has deterred them from pursuing theproposal for exploration altogether. The Committee has envisaged that the State Mining Corporationswould be transformed into MIDFICs, undertaking infrastructure development rather than continuing withprospecting and mining activities. Even if the states decided that the state mining bodies should alsocontinue with their exploration and mining activities, the Committee would strongly recommend that theyshould not try to compel applicants to accept JVs with such bodies.109