No World Bank loan in next six months for Amaravati
Even as AP government tries to pool in funds for the construction of the capital, the largest tranche of loan it sought from World Bank is highly unlikely to happen before next elections.
VIJAYAWADA: Even as the State government tries to pool in funds from as many agencies as possible for the construction of the capital, it appears that the largest tranche of loan it sought from World Bank is ‘highly unlikely’ to happen before next elections. With the international lending agency deciding once again to defer making a recommendation on whether or not an investigation is necessary into the complaints made by a few farmers who alleged irregularities and coercion in the Land Pooling Scheme (LPS) by the government.
According to sources, the Inspection Panel of the World Bank has now deferred recommendation by nine months, and the decision has been approved by its Board of Executive Directors in a meeting held last month. It may be recalled that the panel first deferred taking a decision on the issue six months ago in November 2017.
“The World Bank’s Board of Executive Directors on July 13 approved an Inspection Panel decision to defer for a second time its recommendation on whether an investigation is warranted of the proposed Amaravati Sustainable Capital City Development Project in India. The Panel proposed to report back to the board after nine months or when Bank management authorises the appraisal of the proposed project, whichever arises earlier,” according to the panel’s press statement issued last month.
With the bank making the second deferment, the APCRDA will not be able to tap financial aid as the application would move to appraisal stage for final approval only after the panel gives a clean chit, which may happen after April 2019.
Incidentally, the decision to defer the decision comes a week after Municipal Minister and APCRDA vice-chairman P Narayana claimed (on July 19) that the CEO of World Bank, Kristaline Georgieva, had agreed to process the release of funds at the earliest.
For the uninitiated, two years ago, the AP Capital Region Development Authority (APCRDA) had sought financial assistance from the World Bank for $300 million.
However, in May 2017, a few landowners from capital villages had written to the bank alleging harm from the Land Pooling Scheme (LPS), used to procure the lands required for Amaravati, as well as from other project activities.
The inspection panel had registered the request for inspection in June, 2017, and has been making trips to the capital region to interact with the landholders.
WB loan for Amaravati ‘not’ before mid-2019
It will also take stock of the measures being taken up by the APCRDA to ensure the capital city project is compliant with the environmental and social policies.
However, the State government officials said they would continue to pursue the fund, which would be the largest in terms of quantum if approved. They said even though it has a high-interest rate, the State would seek the loan as it has a component to be borne by the Centre.
“The World Bank loan we sought two years ago was around Rs 4,700 crore. Under the Externally Aided Project (EAP) funding, the Centre’s share -- 30 per cent -- amount to around Rs 1,394 crore. We will pay interest on the rest of about Rs 3,253 crore. So, we will pursue it as we don’t need to put in upfront money for the component which would be taken care of by the Centre,” AP Planning Board vice chairman C Kutumba Rao told TNIE. He said the interest of the World Bank loan could be between 8-11 per cent, after factoring in the sovereign guarantee, hedging costs and currency correction rates. And since there is a risk of the rupee’s value slipping at a faster rate in the future, Rao added, the government would exercise utmost caution while tapping foreign loans.
The call to defer the decision comes a week after Municipal Minister P Narayana claimed the CEO of World Bank had agreed to process the release of funds at the earliest