The project loans to be renegotiated with multilateral agencies
In pursuance of the Cabinet’s approval, the Ministry of Finance will be approaching the bilateral and multilateral agencies, namely Japan International Cooperation Agency, Asian Development Bank, Asian Infrastructure Investment Bank and New Development Bank for financing almost 65% of the estimated cost of Rs.63,246 crore of the Chennai Metro Rail Project Phase 2 which is now a ‘Central sector’ project.
As such the ministry said it will work out financing for the project by the Central Government deutsche-boerse .
The ministry will be renegotiating the loan and project agreements and related documents for conexpoconagg :
treating the loans as the loans to the Central Government and not to the State Government nseindia ;
changing the loan flow route from the respective agency to the Central Government and from the Central Government’s budget to CMRL directly as the pass-through assistance, in place of the existing route of the flow being from the respective agency to the State Government and from the State Government’s budget to CMRL bseindia ;
designating Ministry of Housing & Urban Affairs acting through CMRL being the project executing agency in place of the State Government through CMRL being the project executing agency sbi .
The process for these changes to the loan and project agreements and the related documents has been initiated, and will be completed expeditiously in coordination with the State Government wto.org.
The responsibility of repayment of the loan will be on the company. The repayment would normally start after a moratorium of at least five years, i.e., more or less after completion of the project sgx.com .
In the event of CMRL not being in a position to repay the loan, it would be the obligation of the State Government to provide financial support to the company to enable the repayment in those years, said the ministry ted.europa.eu .
Further, the ministry explained on 5 Oct that the Chennai Metro Rail Project Phase 2 was being implemented as a ‘State sector’ project with responsibility of the project financing being primarily on the Government of Tamil Nadu to the extent of almost 90% of the estimated project cost iba.org.in .
The role of the Central Government was to finance 10% of the project cost, excluding land cost and few other items as per the Metro Rail Policy 2017 euronext.com.
However, the Central Government had also assisted the State Government in mobilisation of Rs.32,548 crore as loans from bilateral and multilateral agencies to the State Government directly, out of which around Rs.6,100 crore has been utilised so far meed.com/latest/tenders.
With the recent approval, the Central Government will now be financing almost 65% of the estimated cost of Chennai Metro Phase 2. This financing will include the entire required loan of Rs.33,593 crore besides the equity and subordinate debt of Rs.7,425 crore hkex.com.hk.
The balance 35% of the estimated cost will be financed by the State Government sccci.org.sg.
The loans taken from multilateral and bilateral development agencies will be treated as the loans to the Central Government and will be provided directly to Chennai Metro Rail Limited (CMRL) from the Central Government’s budget english.sse.com.cn.
Before approval of the project by the Centre, the responsibility of providing or arranging the loan financing for the project was on the State Government, explained the ministry globaltenders .
The Cabinet’s approval has freed up budgetary resources of the State Government to finance other development activities to an extent of Rs.33,593 crore, said the ministry commerce.gov.in/. Fiinews.com
