The World Bank has agreed to provide a loan of Rs 20 billion for a major hydel project on the Sutlej River in Himachal Pradesh, says an official.
The World Bank loan will aid the construction of the 412 MW Rampur project at an interest rate of 8 per cent, an official of the public sector run Sutlej Jal Vidyut Nigam Ltd (SJVNL) told the media.
Apart from the loan, the remaining Rs.13.5 billion will be funded by the central and state governments as both have equity participation in the project, which is being built near Rampur Bushahr town, some 140 km from Shimla, the official said.
"The World Bank has many stringent conditions which we have agreed to meet. This includes rehabilitation of some villagers as well. Out of all options, we thought the World Bank's rate of interest was the lowest," he added.
The Rampur project is scheduled to be completed by 2012. The site is close to the mammoth 1,500 MW Nathpa Jhakri project, the country's largest hydel project.
The filtered waters of the Nathpa project will be diverted to the Rampur one thereby reducing the upcoming project's cost considerably, the official said.
The Nathpa project, which cost a whopping Rs 86 billion, was also largely funded by the World Bank. It came into operation three years ago.