Rs.1,504-crore French aid for Bengaluru Metro

A French development agency on Friday announced 200-million euro (Rs.1,504 crore) as soft loan for the second phase of the much-delayed state-run Bengaluru Metro rail project.

Financing of the Metro rail project is part of the credit facility agreement Agence Francaise de Developpement (AFD) signed with the Indian government in New Delhi on September 3.

Paris-based AFD is a public development finance institution, which implements the French government's policies and supports projects that improve living conditions, boost economic growth and protect the planet through a network of 71 agencies the world over.

"The new funding is in addition to the 110-million euros we gave in 2012 for the project's first phase," AFD regional director (South Asia) Nicolas Fornage told reporters after signing an agreement with Bangalore Metro Rail Corporation Ltd. (BMRCL) managing director Pradeep Singh Kharola here.

The second phase project, estimated to cost a whopping Rs.26,405 crore at the 2011-12 price level for extending the 42-km first phase by an additional 72 km, was approved by the previous (UPA-2) government on January 30, 2014.

According to Kharola, the loan repayment will be over 15 years at interest rate linked to Euro inter-bank offered rate.

"The Metro rail project is aimed at improving the public transport system in the city, which has grown rapidly over the last two decades on IT boom and influx of people from all over the country," Karnataka Chief Minister Siddaramaiah said on the occasion.

Of the estimated cost, the central government will provide Rs.5,281 crore and the state government Rs.8,983 crore, while the remaining amount will be raised through debt from multilateral/bilateral funding agencies like AFD and JICA and Indian financial institutions.

The Japan International Cooperation Agency (JICA) has also contributed to the project's first phase, while the Asian Development Bank has agreed to grant a $250 million loan for the second phase.

The second phase is expected to be taken up in 2017 after the first phase, which is three years behind schedule, with its cost escalating to over Rs.12,000 crore from Rs.8,000 crore in 2008.

As the country's third biggest city and hub of the new economy, Bengaluru has about one crore denizens, with 55 lakh vehicles and a floating population of 15-20 lakh daily.

"The Metro network across the expanded city will ease traffic congestion, reduce pollution and promote low-carbon mobility," AFD said in a statement.

French consul-general Francois Gautier was also present on the occasion.