News Brief
Centre To Finance 65 Per Cent Of Estimated Cost Of Chennai Metro Phase 2: Finance Ministry
Chennai Metro Rail (L&T)
Union Finance Ministry on Saturday (5 October) said that after the Union Cabinet approval, the Central Government will now be financing almost 65 per cent of the estimated cost of Chennai Metro Phase two.
The Prime Minister Narendra Modi-led Union Cabinet had on Thursday (3 October) approved the Chennai Metro Rail Project Phase two as the ‘Central sector’ project recently at a total estimated cost of Rs 63,246 crore.
"So far, the project was being implemented as a ‘State sector’ project with responsibility of the project financing being primarily on the Government of Tamil Nadu to the extent of almost 90 per cent of the estimated project cost. The role of the Central Government was to finance 10 per cent of the project cost, excluding land cost and few other items as per the Metro Rail Policy 2017," the Finance Ministry said in a statement on Saturday.
However, the Central Government had also assisted the Tamil Nadu government in mobilisation of Rs 32,548 crore as loans from bilateral and multilateral agencies to the state government directly, out of which around Rs. 6,100 crore has been utilised so far, the ministry added.
"With the recent approval, the Central Government now will be financing almost 65 per cent of the estimated cost of Chennai Metro Phase 2. This financing will include the entire required loan of Rs 33,593 crore besides the equity and subordinate debt of Rs 7,425 crore," the Finance Ministry said.
The balance 35 per cent of the estimated cost will be financed by the State Government, it added.
The loans taken from multilateral and bilateral development agencies will be treated as the loans to the Central Government and will be provided directly to Chennai Metro Rail Limited (CMRL) from the Centre's budget.
Before approval of the project by the Centre, the responsibility of providing or arranging the loan financing for the project was on the state government.
According to the statement, in pursuance of the Union Cabinet’s approval, the Finance Ministry will be approaching the 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 and related documents for:
Treating the loans as the loans to the Central Government and not to the state government,
Changing the loan flow route from the respective agency to the Central Government and from the Centre’s budget to CMRL directly as the pass-through assistance, in place of the existing route of the flow being from the respective agency to the state government and from the state government’s budget to CMRL,
Designating Ministry of Housing and Urban Affairs, acting through CMRL, being the project executing agency in place of the state government through CMRL being the project executing agency.
The ministry said that the process for these changes to the loan and project agreements and the related documents has been initiated, and will be completed expeditiously in coordination with the state government.
"The responsibility of repayment of the loan will be on the company," the ministry said, adding that the repayment would normally start after a moratorium of at least five years, i.e., more or less after 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, it added.
