Structure of the SPV

1. Structure of the SPV

The City level SPV was established as a Limited Company under the Companies Act, 2013 and it is promoted by the State/UT and the ULB jointly, both having 50:50 equity shareholding. This shareholding pattern has to be maintained at all times. The private sector or financial institutions could be considered for taking equity stake in the SPV, provided the State/UT and the ULB share are equal to each other, and together the State/UT and ULB have majority shareholding and control of the SPV (e.g. State/UT:ULB:Private sector shareholding can be in the ratio 40:40:20 or 30:30:40. Ratios such as 35:45:20 or 40:30:30 are not permitted since State/UT and ULB shares are not equal. Ratios such as 20:20:60 are also not permitted since the State/UT and the ULB together do not have majority shareholding). In addition to equity, the State/UT can provide its contribution to the Smart Cities Mission as grant to fulfil the State Government responsibility for ensuring availability of funds for the mission and for ensuring the financial sustainability of the SPV.

2. Raising and utilization of funds by the Company (SPV)

The funds given by the Central Government to the SPV will be in the shape of tied grants and kept in a separate Grant Fund. These funds will be utilized only for the purposes given in the Mission Statement and Guidelines and subject to the conditions laid down by the Central Government. The ULBs may, through the State Government, request MoUD to permit utilization of GoI grants as ULB’s equity contribution to the SPV, subject to the following conditions:

i. The State Government has made adequate contribution to the SPV out of their own funds.
ii. The approval will be limited to the GoI grants that have already been released. Since future instalments of Smart City funds are subject to performance and are not guaranteed, the ULB will not be permitted to earmark future instalments to meet its equity contribution.
iii. The utilization of GoI grants as equity contributions will not alter the relative shareholding of the State Government and the ULB, which will remain equal as per Mission guidelines.
iv. It is clarified that the Government of India contribution to Smart Cities is strictly in the form of grant and the ULB is exercising its own discretion in utilizing these funds as its equity contribution to the SPV.

The SPV will also access funds from other sources such as debt, loans, user charges, taxes, surcharges, etc.

The key functions and responsibilities of the SPV are to:
i. Approve and sanction the projects including their technical appraisal.
ii. Execute the Smart City Proposal with complete operational freedom.
iii. Take measures to comply with the requirements of MoUD with respect to the implementation of the Smart Cities programme.
iv. Mobilize resources within timelines and take measures necessary for the mobilisation of resources.
v. Approve and act upon the reports of a third party Review and Monitoring Agency.
vi. Overview Capacity Building activities.
vii. Develop and benefit from inter-linkages of academic institutions and organizations.
viii. Ensure timely completion of projects according to set timelines.
ix. Undertake review of activities of the Mission including budget, implementation of projects, and preparation of SCP and co-ordination with other missions / schemes and activities of various ministries.
x. Monitor and review quality control related matters and act upon issues arising there of.
xi. Incorporate joint ventures and subsidiaries and enter into Public Private Partnerships as may be required for the implementation of the smart cities programme
xii. Enter into contracts, partnerships and service delivery arrangements as may be required for the implementation of the Smart Cities Mission.
xiii. Determine and collect user charges as authorised by the ULB
xiv. Collect taxes, surcharges etc. as authorised by the ULB