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News Entry# 288104
Dec 09 2016 (10:05)  Metro rail: Govt. banks on France, German banks (
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Commentary/Human InterestAPCR/Amaravati Metro  -  

News Entry# 288104     
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Posted by: rdb*^  133024 news posts
In-principle approval received; loan of Rs.4,000 crore expected
VIJAYAWADA: After opting out of the proposal to approach the Japanese International Cooperation Agency (JICA) for loan, the State government is heavily banking on funding by German and French development banks KfW and Agence Francaise de Development (AFD) to put the Metro rail on track.
The government is expecting a loan of Rs.4,000 crore from these banks, which have in principle approved the loan. They are yet to work out individual contributions.
pre-appraisal team from the KfW and the AFD studied the project in the first week of November and agreed in principle to fund the project. It will take another four months for these banks to give the final approval, according to Urban Development Minister P. Narayana.
Faced with fund crunch, the State government is planning to execute works and meet the compensation payments towards land acquisition from the loan sanctioned by the French and German banks. The State and Central governments would have to share 20 per cent each of the total cost of the project. It is estimated that the Vijayawada Metro rail project would cost Rs.6,900 crore. Of this, close to Rs.1,380 crore is the share of State and Central governments. The remaining has to be pooled through loans.
The Central government, however, will not release its share unless the project is cleared by the Public Investment Board (PIB). The Urban Development Ministry had raised objections in August last over the feasibility of the project pointing out some shortcomings, sources say.
The Ministry said the DPR was not meeting the criteria for Metro Rail. The peak hour per direction traffic (PHPDT) should be more than 20,000 for at least 5 km of continuous length by 2021. However, it would achieve this only in the year 2041. The projected PHPDT for both corridors is only 12,700.
The Amaravati Metro Rail Corporation (AMRC) held talks with various external funding agencies, including the European Investment Bank, World Bank and other Asian agencies. The government also explored the ‘green route’ and planned to tap funds through the Climate Bonds Initiative, a U.K.-based non-profitable organisation.
The government opted out of JICA loan as it made clear that the soft loan would be ‘tied’ loan and insisted that 30 per cent of the loan component must be utilised for procurement of rolling stocks from Japan only.
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