KOCHI: Close on the heels of the World Bank decision to provide $250 million development policy loan for the Rebuild Kerala initiative, German development bank KfW is expected to sanction 170 million euros ($200 million) for building disaster resilient roads and bridges in the state while the talks with the Asian Development Bank (ADB) for water supply projects is progressing fast.
“We have held several meetings with KfW officials, and they are interested in funding the state’s road projects. The project proposals have been approved by the agency, and it has gone to the Department of Economic Affairs (Ministry of Finance, Government of India) for approval. Once the DEA gives its approval, the proposals will be put before the KfW board. It’s a long process. But we are hopeful to get the first tranche by July,” said V Venu, principal secretary, and CEO of Rebuild Kerala Initiative.
He said the interest rates on the loans will be linked to Libor (London Inter-bank Offered Rate). “It will be 1-1.5% above the Libor rates,” Venu said.
KfW’s 170 million euro loan will also be in two tranches – 90 million euros in the first tranche and the remaining 80 million euros in the second tranche by December.
Out of the World Bank’s offer of $250 million, $160 million is offered at a lower rate of less than 1.5 per cent with a repayment period of 30 years.
Similarly, Kerala government officials are also negotiating with ADB for loans towards water supply projects.
“ADB is very keen to fund our water supply projects. The discussions are progressing well. It is also a long process, but we are hopeful of closing the deal,” said Venu, adding that he is expecting to get the final approval by August or September.
The World Bank offer
$160 million offered at a lower rate of less than 1.5% with a repayment period of 30 years
The remaining $90 mn fixed at 4% with repayment period of 20-25 years.
The World Bank’s board of governors, on June 27, is expected to approve the loan