BENGALURU: Following two visits by the European Investment Bank (EIB) officials to the city, the Luxemburg-based non-profit lending institution is set to chip in with a huge contribution for the Metro Phase-II.
With a completion deadline of 2020, the Metro Phase-II involves 72.1-km of lines and is an extension of the existing lines of Phase-I with two additional lines.
Speaking to Express, Bangalore Metro Rail Corporation Limited (BMRCL) Managing Director Pradeep Singh Kharola, said, “This is a big breakthrough for us. Of the `26,405 crore project, the EIB will be lending us `3,700 crore. The repayment period for the loan will be 20 years,”
The EIB teams came down to the city, once in October and again in November. “The visitors travelled by Metro trains and were impressed with the work done in Phase-I. They also evinced interest in funding a part of Phase-II,” he said. The EIB later gave in-principle approval for the funding.
“We are presently readying all the documents required to complete the formalities. Another team will be visiting in March to finalise the agreement,” Kharola said. Funding is expected to be given a couple of months later.
During an interaction with reporters earlier, Bengaluru Development Minister K J George, said he is confident about the financial viability of Namma Metro.
Low interest rate
What is significant from BMRCL’s point of view is that the loan will come at a lower rate of interest than that provided by another foreign institutional lender, the French-based Agence Francaise De Development (AFD).
The AFD will be funding Rs 1,600 crore for Phase-II. The rate of interest to be paid on the loan is linked to Euribor (Euro Interbank Offered Rate) +130 basis points.
Out of the total project cost, BMRCL is permitted to raise up to Rs 9,000 crore through loans. “To mobilise the remaining amount, we are also looking at funding from the Asian Infrastructure Investment Bank (headquartered in China) in which India is the second-biggest shareholder. Floating market bonds and long-term bank loans will be other steps taken,” the MD said.
Nearly Rs 15,000 crore for Phase-II project will be funded by the state and Central governments.
For funding the Rs 12, 845-crore Phase-I project, Metro had availed loans from Japan International Co-operation Agency (JAICA), Asian Development Bank (ADB) and the Housing and Urban Development Corporation (HUDCO) and AFD apart from government funding.