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Asian Infrastructure Investment Bank pulls out of Amaravati funding after World Bank snub

The decision of both the development banks to back out of Amaravati has dealt a double blow to the Andhra Pradesh Capital Region Development Authority (APCRDA).

Published: 24th July 2019 07:49 AM  |   Last Updated: 24th July 2019 01:20 PM   |  A+A-

Amravati

Amravati. (File Photo)

Express News Service

VIJAYAWADA: A week after the World Bank pulled out of Amaravati, the Asian Infrastructure Investment Bank (AIIB) also has decided to withdraw its offer to finance the capital city project. The AIIB had committed to co-finance $200 million (Rs 1,400 crore) along with the World Bank, which was to provide $300 million (Rs 2,100 crore) for the project.

In a communication to TNIE on Tuesday, AIIB spokesperson Laurel Ostfield said, “AIIB is no longer considering the Amaravati Sustainable Infrastructure and Institutional Development Project for funding.” The spokesperson did not give any reasons for the Beijing-based lending agency’s decision to back out of its commitment.

ALSO READ: Charges fly thick and fast as World Bank loan issue rocks Andhra Pradesh legislative assembly

The decision was taken after the investment committee of the AIIB came to know about the World Bank’s move to drop Amaravati from its funding proposal following Centre’s withdrawal of the request for financing the project on July 15.

The decision of both the development banks to back out of Amaravati has dealt a double blow to the Andhra Pradesh Capital Region Development Authority (APCRDA).

Together, the World Bank and the AIIB committed to funding Rs 3,500 crore, one of the largest chunks of APCRDA’s borrowing plans.

A senior official felt that the banks’ decision would hit the credibility of the capital city project. “It will definitely affect the credibility of the project, especially since the World Bank wanted to probe the allegations,” the official added.

“The international agencies’ pullout would also have a ripple effect domestically as we had planned to borrow from Indian banks as well,” the official said, adding that the authority reached an advanced stage in negotiations with various domestic banks for borrowing Rs 10,000 crore. The proposal has not materialised yet.

The APCRDA now awaits YS Jagan Mohan Reddy government’s policy on capital development. The CM has repeatedly maintained that Amaravati reeked of corruption and constituted a committee to look into the works awarded by the TDP regime.

The ruling YSRC and the Opposition TDP blamed each other for loan offer withdrawal by the World Bank. However, Finance Minister Buggana Rajendranath Reddy, on Monday, released a statement stating that the State government informed the Department of Economic Affairs (DEA), Union Ministry of Finance, to ‘take an appropriate call’ when the World Bank wanted to probe the alleged irregularities committed by the previous TDP dispensation.

ALSO READ: YSRCP, TDP in blame game as World Bank says it dropped USD 300 million loan for Amaravati as Centre withdrew request

Officials from the Chief Minister’s Office said that since both the Centre and the State didn’t want a probe before the proposal was finalised, the DEA asked the World Bank to drop the loan application.
The lending agency, however, reaffirmed its commitment to finance other priority projects of the new government, should it request.

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