The deadlock over the sanctioning of a soft loan for 117 km of Delhi Metro's phase 3 project has finally come to an end. The Japanese government will sign the long-pending agreement with India on Sunday.
Once this official formality is over, the Japan International Cooperation Agency (JICA) will release the funds to Delhi Metro, as and when required.
The JICA was all set to release first instalment of the proposed loan for the project in December last year but it was delayed due to the delay in the appraisal process of the official request received from India's finance ministry about sanctioning of loan for Metro's phase 3, said sources.
As per the procedure, the ministry will receive the loan from JICA and hand over the amount to Delhi Metro Rail Corporation (DMRC).
"This is quite a positive development and would add momentum to the ongoing phase 3 project, as monetary support is one of the most crucial elements for the project," said Anuj Dayal, spokesperson of DMRC.
The JICA would offer over 50% of the total project cost of R35,000 crore as soft loan. Through this agreement, JICA would release a total of Rs 6,400 crore which has to be used by DMRC by 2014. Then the two countries would sign another agreement for the remaining part of the loan, said Dayal.
"The loan will be sanctioned at 1.40% rate of interest to be repaid in 30 years with a grace period of 10 years," said a JICA official.
On April 26 last year, a JICA team had met Delhi Metro directors at the Metro Bhawan in New Delhi to discuss the project's modalities of funding and loan requirements. The team had appreciated the sustainability of the relationship between India and Japan for Metro projects.
In the first phase, JICA had given Delhi Metro 60% of the Rs 10,571 crore project cost to be incurred on the phase 3, while in the second phase the Metro received 55% of Rs 19,600 crore from JICA.
Work on some phase 3 corriodors is already on.