Canara Bank extends Rs 1170 cr to metro project

Kochi Metro Rail Limited (KMRL) will get a loan of Rs 1,170 crore from the state-run Canara Bank.

The director-level board meeting of KMRL held today in Delhi has formally decided to accept the financial assistance extended by the bank. The 20-year term loan, with a moratorium of seven years, will attract an interest rate of 10.8 per cent.

A tripartite agreement was also signed between the Centre, Kerala government and KMRL during the board meeting. This agreement defines the role and responsibilities of these institutions in the project.

The board also decided to entrust Delhi-based Senes Consultants for the environment impact study and Hyderabad-based R V Associates for social impact assessment of the project. Both agencies would complete their studies within six months. A comprehensive rehabilitation and resettlement policy and a compensation package will be prepared by the consultants.

The KMRL will also source overseas agencies for funding the project. The Agence Francaise De Development (AFD), a French funding agency, is likely to provide assistance to the tune of Rs 1,400 crore (Euro 180 million) for the project. Besides, Japan International Cooperation Agency (Jica) too is interested in extending loan. The external commercial borrowings from both will be to the tune of Rs 2,170 crore.

The AFD mission had visited Kochi twice this year and evaluated the progress of the project. They had agreed in-principle to extend the loan during their discussions with the top brass of the metro and the Delhi Metro Rail Corporation (DMRC).

The loan appraisal process was under way and is expected to be finalised by the board of AFD in this year.

The formal agreement between KMRL and AFD would be signed in February 2014. The loan from AFD loan comes with a nine-year moratorium and the rate of interest will be 2 per cent.

The total estimated cost for Kochi Metro is Rs 5180 crore which is scheduled to be completed by 2016.

The first phase will have 22 stations and have a system length of 26 kms.

A ten-member JICA team visited Kochi last November and their preliminary report is expected soon.

The loans expected from AFD and JICA work out to about 42 per cent of the total project cost.

The Union government had given the final approval for the project in last July. The state is expected to pool in Rs 2,009 crore (including land acquisition cost) and the Centre Rs 1,002 crore.

Both central and state government will extend financial support through capital investment. Work on Aluva - Palarivattam reach had already commenced and it is in full swing at the Edappilly area.