For Mumbai’s 118-km metro network, the Maharashtra government plans to ask for financial assistance from the Japanese Ministry of Economy, Trade and Industry (METI), which offers loans at an interest rate of 0.1% to 0.3%.
The loan for the project is among the things chief minister Devendra Fadnavis will discuss during his visit to Japan next week, with state officials laying the foundation at a recent meeting with Japanese government officials.
While the government is in talks with the Japan International Cooperation Agency (JICA) for a loan for the 22.5km Mumbai Trans Harbour Link (MTHL), it may approach METI for this loan as well, keeping in mind the lower interest rates.
“The financial assistance from METI will be sought under the g2g (government-to-government) model. As the interest rates on repayment are low, we are planning to include the MTHL project also when we seek the loan,” said an official close to the development. METI provides two kinds of loans.
The first is the Step Loan, at a 0.1% interest rate and repayment period of 40 years. The caveat here is that the project be fully executed by a Japanese company. If a joint venture is formed between a Japanese company and the Indian government, the Japanese company will have discretionary powers.
The second kind of loan is the Special ODA (Oversees Development Agencies) Loan, where interest rate is 0.3%, with a repayment period of 40 years.
Under this type, the state government can be a nodal agency, but 30% cost of the project should have goods procured from Japanese Companies. “We are exploring a new funding mechanism for our upcoming infrastructure projects, and the Special ODA loan appeared most suitable,” the official said.