Centre allots Rs 10 cr for Gujarat metro project

The assistance has been announced as a central tax reimbursement for Metrolink Express between Gandhinagar and Express

In a big boost to the Metrolink Express between Gandhinagar and Express (MEGA), the Central Government has finally proposed a provision of Rs 6,450.75 crore assistance for all metro rail projects for the current fiscal of 2013-14.

The assistance has been announced as a central tax reimbursement for the projects, wherein MEGA would receive Rs 10.1 crore this year.

"The central government offers two types of financial assistance. Firstly, it offers 20 per cent of the total project cost as either viability gap fund (VGF) or as an equity. Secondly, it reimburses all central taxes and terms such reimbursement as subordinate debt. In this case, we have been allotted assistance as central tax reimbursement for the current fiscal worth Rs 10.1 crore," said an official source privy to the development.

However, the central government's assistance upto 20 per cent of the total project comes to around Rs 3,800 crore which it is likely to announce in near future. The total project cost for MEGA at current rates comes to around Rs 19,000 crore. It needs to be mentioned here that the (MEGA) project is set to witness the financial closure of Rs 6,000 crore for its first phase in next couple months.

The nodal agency for the project has finalised a consortium of SBI, Bank of India and IDBI to work out on raising the requisite fund of Rs 6,000 crore for the first phase, which is expected to be closed by May.

"On a positive note we have seen MEGA being mentioned both in the Union as well as Gujarat state budget recently. Typically, the central government picks up a 25 per cent stake in a metro project and we hope to see the same will happen in case of MEGA. For now, there will be a consortium of several banks led by SBI, Bank of India and IDBI who will soon look for financial closure of Rs 6,000 crore for the first phase of the project which should happen by May," Sanjay Gupta, ex-IAS and chairman of MEGA had told Business Standard earlier.

Meanwhile, the Gujarat government has also committed its 15 per cent share of financial support.

The rest 50-60 per cent of the total project cost will be raised through debt sources wherein the banks have been roped in even as the first phase funding of Rs 6,000 crore is likely to see closure soon.

In the recent state budget, finance minister Nitin Patel allocated additional Rs 500 crore for the project, over and above the Rs 377-odd crore received so far from Gujarat government.