Germany clears Rs.3,500 Crore loan for Nagpur Metro Rail

Nagpur MetroNagpur (NGP): The Nagpur metro rail has achieved a major landmark with German government-owned development bank KfW sanctioning a 500 million Euro (over Rs.3,500 crore) loan. Union finance minister Arun Jaitley has cleared it and Nagpur Metro Rail Corporation Limited (NMRCL) is expected to get a letter from his ministry in this regard, next week.

NMRCL requires another 130 million Euro (about Rs.900 crore) loan. Agence Francais de Developpement (AFD), a French government agency, has agreed to provide this amount. The deal for this loan is likely to be finalized this month.

Brijesh Dixit, managing director of NMRCL, told that the rate of interest of the German loan would be between 1.6% and 1.7%. “The exact rate of interest will be determined by the average of European Interbank Offered Rate (Euribor) in last six months from the date of signing the loan agreement. The rate is Euribor plus a fixed component of 0.3%,” he said.

The rate of interest provided by AFD will be determined by a similar formula. Only the fixed component may be slightly different. The rate of interest may seem to be very low but depreciation of the rupee effectively increases it sharply. If the depreciation in last ten years is taken then it will go up to 8%.

The cost of the project, if it is completed by 2018, is Rs.8,680 crore. The loan component is 50%, which comes to Rs.4,340 crore. The remaining amount is to be provided by central government, state government, Nagpur Municipal Corporation (NMC) and Nagpur Improvement Trust (NIT).

Dixit further said that work was progressing on the construction front fast. “NMRCL has got the possession of the State Reserve Police Force (SRPF) land and has started survey on it. The police department had told NMRCL that shooting practice was scheduled from September 5 to 12. We are therefore not doing survey of the shooting range. It will be from after September 13. The practice does not otherwise interfere with out work as it will be held from 7 am to 12 noon,” he said.

NMRCL has set up a prefabrication unit in Mihan on the land meant for the car depot. The boundary wall of the car depot and the 5 km at grade section will be prefabricated here and then fitted between the columns being erected along the corridor. The agency is looking for a 5 hectare land close to the city for prefabricating the elevated track.

Money matters

Cost of the project | Rs.8,680 crore
Loan component | Rs.4,340 crore
Loan from KfW (Germany) | Rs.3,500 crore
Rate of interest | 1.6% – 1.7%
Loan from AFD (France) | Rs.900 crore