Chennai Metro Rail has been carrying out double-decker construction work along Arcot Road as part of Phase-2 project.
| Photo Credit: R. Ravindran
With the Chennai Metro Rail’s Phase-2 becoming a ‘Central sector’ project, the Union government will finance nearly 65% of the estimated cost of the project of ₹63,246 crore, the Finance Ministry said in a statement on Saturday.
For the last couple of years, the project was taken up as a ‘State sector’ project and the Tamil Nadu government had to bear the responsibility of financing it, or raising funds for it.
The Union government had to only pitch in 10% of the cost, excluding land and a few other things, according to the Metro Rail Policy 2017, the statement said. But the Centre had facilitated and assisted in mobilising ₹32,548 crore as loans from bilateral and multilateral agencies and of this, about ₹6,100 crore has been used for the project as of now.
Since the Union government has approved the project now, they will finance around 65% of the cost, which will include ₹33,593 crore apart from the equity and subordinate debt of ₹7,425 crore. The remaining 35% funds would have to be borne by the State government, the Ministry said.
“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 Central government’s budget,” the Ministry said.
Until the point when the project was ‘State sector’ project, the State government had the responsibility of arranging the loans. One of the important aspects of the Union Cabinet’s approval for the project, it has significantly freed up the State government’s budgetary resources to fund other ‘development activities’, the Ministry said.
Following the approval, the Finance Ministry will now renegotiate loan and project agreements with Japan International Cooperation Agency (JICA), Asian Development Bank (ADB) and Asian Infrastructure Investment Bank (AIIB). As a result, the loans will be treated as that given out to the Centre and not the State government.
The loan flow will change from banks to the Centre and from the Union government’s budget to CMRL instead of the existing arrangement wherein the loan goes through from the banks to the State government and from their budget to CMRL, the Ministry said.
The process to make changes to the loans and the agreements has begun and will be quickly completed, coordinating with the State government.
The Finance Ministry has noted that CMRL bears the responsibility to repay the loans and this process will commence after the moratorium period of around five years. In case CMRL is unable to repay the loans, the State government has to give financial support to CMRL for the same.
Published – October 06, 2024 12:50 am IST