CHENNAI: The union government will fund 65% of the estimated cost of Rs 63,246 crore of the Chennai Metro Phase-II project, which will add up to over Rs 41,000 crore, the finance ministry said on Saturday. This will include the entire required loan of Rs 33,593 crore, besides the equity and subordinate debt of Rs 7,425 crore. The balance 35% or Rs 22,000 crore of the estimated cost will be financed by the state government.
The nomenclature of the project has now been changed to ‘central sector’ project from ‘state sector’ project as per the request of the Tamil Nadu government, a release from the finance ministry said on Saturday.
The loans taken from multilateral and bilateral development agencies will be treated as loans to the union government and will be provided directly to the Chennai Metro Rail Limited (CMRL) from the union budget, the release said.
So far, the project was being implemented as a ‘state sector’ project with the responsibility of the project financing being primarily on the government of Tamil Nadu to the extent of almost 90% of the cost. The role of the central government was to finance 10% of the cost, excluding land cost and few other items as per the Metro Rail Policy 2017.
However, the centre had also assisted the state in mobilisation of Rs 32,548 crore as loans from bilateral and multilateral agencies to the state directly, of which about Rs 6,100 crore has been utilised so far. Before the approval of the project by the centre, the responsibility of providing or arranging the loan financing for the project was on the state government. The Union Cabinet’s approval has freed up budgetary resources of the state government to finance other development activities to the extent of Rs 33,593 crore, the finance ministry said.
“In pursuance of the Cabinet’s approval, the Ministry of Finance will be approaching bilateral and multilateral agencies, namely Japan International Cooperation Agency, Asian Development Bank, Asian Infrastructure Investment Bank and New Development Bank for renegotiating the loan and project agreements,” the ministry said.
The responsibility of repayment of the loan will be on the company (CMRL). The repayment would normally start after a moratorium of at least five years, i.e., more or less after the completion of the project. “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,” the ministry said.