The Finance Ministry on Saturday said it will finance 65 per cent of the estimated cost of the Chennai Metro Phase 2 project, with a total cost of over Rs 41,000 crore.
The Union Cabinet on Thursday approved the proposal to construct three corridors under the second phase of the Chennai Metro Rail project with an estimated total cost of Rs 63,246 crore.
The Centre’s share totals over Rs 41,000 crore.
The central government will finance almost 65% of the estimated cost of the second phase of Chennai Metro, the finance ministry said in a statement.
This includes total financing requirements of Rs 33,593 billion, in addition to equity and subordinated debt of Rs 7,425 billion.
The remaining 35% of the estimated cost will be covered by the state government.
“Loans from multilateral and bilateral development agencies will be treated as loans to the central government and will be provided directly to Chennai Metro Rail Limited (CMRL) from the central government’s budget,” the statement added.
So far, the project has been implemented as a “state-run” project, with nearly 90 per cent of the estimated project cost being primarily responsible for project financing by the Tamil Nadu government.
The central government’s role was to finance 10 per cent of the project cost, excluding land cost and few other items, as per Metro Rail Policy 2017.
However, the central government has also supported state governments in mobilizing Rs 32,548 billion as direct loans to state governments from bilateral and multilateral institutions, of which around Rs 6,100 billion has been utilized so far.
Prior to the approval of the project by the Center, the responsibility of providing or arranging financing for the project rested with the state government.
With the approval of the Union Cabinet, the state government’s budgetary resources have been made available to fund other development activities to the extent of Rs 33,593 crore, the finance ministry added.
“Subject to the approval of the Union Cabinet, the Ministry of Finance will approach bilateral and multilateral institutions such as the Japan International Cooperation Agency, Asian Development Bank, Asian Infrastructure Investment Bank and New Development Bank for renegotiation of loans and project agreements.” the paper said. the ministry said.
The company (CMRL) is responsible for repaying the loan. Repayment typically begins at least five years after project completion, more or less after a grace period.
“In case CMRL is unable to repay the loan, it will be the duty of the state government to provide financial assistance to the company to repay the loan within that period,” the ministry added.
