The impasse over the sanctioning of a soft loan for Delhi Metro's phase 3 project is finally over. Japan, which was recently hit by disaster, will release the first instalment of the proposed loan for the 105km project in December.
Japan International Cooperation Agency (JICA) is all set to fund Delhi Metro's upcoming Rs32,000 crore project as it has almost completed all requisite formalities.
"We are near the end of the appraisal process of the official request received from India's finance ministry about sanctioning of loan for Delhi Metro's phase 3. In December, we will be able to sanction the first part of the loan through signing of an agreement between India's finance ministry and the Japan government," Yuichiro Sano, representative, JICA.
Ministry of Finance, which will take the loan, will hand over the amount to Delhi Metro Rail Corporation (DMRC), he added.
"We are yet to receive any final communication from JICA about the sanctioning of the loan amount. If JICA sanctions the soft loan, the financial crunch for the project will reduce extensively," said a DMRC spokesperson.
On April 26, a JICA team had met Delhi Metro directors at Metro Bhawan to discuss the project's modalities of funding and loan requirements.
Delhi Metro had proposed a debt equity ratio of 60:40 under which the Centre and the Delhi governments will contribute 30% each and the rest will be raised by soft loans from JICA, said sources.
"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 Sano. Earlier, JICA had given a soft loan to Delhi Metro at different rates of interest varying between 1.2% to 2.3% in phases 1 and 2. Appreciating the sustainability of the relationship between India and Japan for Metro projects, he added: "We have been supporting the Delhi metro project for the past 15 years. It seems out commitment is reducing as Delhi Metro's demand for monetary support is reducing."
In the first phase, JICA had given Delhi Metro 60% of the R10,571 crore project cost, while in the second phase the metro had received 55% of R19,600 crore from JICA. In phase 3 DMRC has asked for only 40% of about R32,000 crore, said JICA officials.
The phase 3 project has already got clearances from the state and the Centre and both the governments have made budgetary provisions to meet the initial cost.