New Delhi, Oct. 26: A cabinet committee headed by Prime Minister Manmohan Singh will soon clear the plans for setting up India Infrastructure Corporation Ltd. The corporation will fund public-private ventures such as airports, urban rapid transport systems, gas pipelines, special economic zones, international convention centres and tourism infrastructure projects.

The corporation will have an authorised capital of Rs 1,000 crore, but will fund projects worth much more through long-term debts to be raised from the open market and guaranteed by the government. Under the public-private partnership projects, the state will transfer land and rights to the new companies to collect user charges and the partner will bring in managerial and technical expertise.

Sources said the corporation, which will work like a special purpose vehicle, would be operationalised by December so that “at least some loans can be disbursed in the last quarter of this fiscal”. The two metro airport modernisation projects ? Delhi and Mumbai ? and rapid transport projects in Delhi and Bangalore are expected to figure among the public-private partnerships to be funded by the new corporation.

As the debt raised from the market by the corporation will be guaranteed by the government, interest rates are expected to be as low as 6-7 per cent. Pay-back by projects, which borrow from the fund, will be long-term and spread over 20-30 years.

The concept has been touted by the finance ministry as the solution to budgetary constraints. However, critics in the government see it as a catalyst that will induce ministries and state governments to privatise many services which are otherwise the government’s responsibility such as sewage.

All public-private partnerships (PPP), which are to be funded by the corporation, will be appraised by a special unit being set up by the Planning Commission to be called the PPP Appraisal Unit. The cases will be put up before the appraisal committee, comprising the secretaries of the department of economic affairs, the Planning Commission, department of expenditure, department of legal affairs and the department sponsoring the project.

However, small projects worth less than Rs 100 crore and based on accepted model concession agreements, will not have to go through the appraisal committee route and can be cleared by the respective ministries.

Senior government officials said projects costing more would go through the normal vetting process and be put up before the “appropriate authority”. A model concession agreement has been prepared by Planning Commission officials and is being patented for use by public-private partnerships approved by the government.