Despite DMRC claims, JICA funding won’t come cheap

Thiruvananthapuram (TVC):  In a meeting organized by Trivandrum development authority a month ago, principal adviser of Delhi Metro Rail Corporation Ltd (DMRC) E Sreedharan explained how monorail project had turned out to be a failure. He said that there were only a few private players such as Scomi, Hyundai and Bombardier. Scomi was avoided due to faults in Mumbai metro. Hyundai was avoided so that they had to take tied up or STEP loans of JICA. Finally, Bombardier, the lone bidder, had quoted an exorbitant rate forcing government to scrap the project.

Just a month later, Sreedharan has urged government to seek the same Special Terms for Economic Partnership (STEP) of Japanese loans for light metro project. Sreedharan has informed the state government that the loans will be available at very cheap interest. However, experts in the field say that the interest of the loan may go above 9% due to fluctuations in foreign exchange rates and various other factors.

The Union government is discouraging tied up loans in infrastructure projects as it is against participation of companies from countries other than from the country of interest of financier. Even an Indian company can participate in the tender only if they have a joint venture with any Japanese technology provider.

The DMRC is pressurizing the government to approve the detailed project report of light metro, which has too many flaws pointed out by the finance department. The DMRC has informed the state that they could begin process for loan only after getting approval for DPR, a decision on which has been delayed since October last due to various flaws.

However, the project needs permission of department of economic affairs and it is a time consuming process. The state government has already announced its decision to approve the DPR and award the general consultancy to DMRC on nomination basis, against the recommendations of finance department.

JICA website specifies that Japanese technologies or equipment must be used for projects which utilize STEP loans. “This may not affect projects like JICA-assisted water supply projects, where Japanese companies do not have much role. But for mass rapid transit projects, the state will have to purchase Japanese goods or use the consultancy of Japanese firms without any open tender.

Sources said that though Sreedharan assured CM of JICA loans for light metro, the DMRC is also trying for French loans — loans from Agence Francaise de Developpement (AFD). It is worth noticing that though JICA expressed interest in Kochi metro project, the Kochi Metro Rail Ltd finally accepted AFD.

The Union government and finance department has suggested Public Private Partnership (PPP) mode for the light metro project. However, the state government has decided not to use PPP mode due to objection from Sreedharan.

Sources said all these concerns will be part of the note to be put up by the works department before the cabinet next week.