Mumbai metro: Agency to tap domestic funds as government won’t guarantee more loans
Mumbai city news: According to a senior bureaucrat, the Maharashtra government is not keen on increasing its loan burden after announcing the Rs34,022-crore farm loan waiver.mumbai Updated: Jul 11, 2017 09:02 IST
Mumbai Metropolitan Region Development Authority (MMRDA), the nodal agency for the metro projects, has planned to raise funds through the domestic market for the big-ticket metro projects, as the state government has decided to not stand as guarantor for loans required for the remaining metro projects in Mumbai.
According to a senior bureaucrat, the Maharashtra government is not keen on increasing its loan burden after announcing the Rs34,022-crore farm loan waiver.
“Loans through multilateral agencies will put an additional burden on the state government’s finances, especially after the farm loan waiver. MMRDA will raise funds through domestic markets for the projects,” the bureaucrat said.
State agencies prefer international funding agencies to loan them money since their interest rates are much lower than domestic lenders.
The MMRDA has planned a 190-km metro network in the city, for which it requires over Rs85,000 crore. Recently, the MMRDA finalised loans worth Rs13,660 crore from multilateral agencies for four metro corridors. The state government, after initially declining to back them, agreed to stand as guarantor.
“We are going to raise funds through domestic markets; we will raise bonds. We are talking to the Life Insurance Corporation of India and the response is positive. Standing as a guarantor to the MMRDA for loans from the domestic market does burden the state government. The Government of India has given each state a borrowing limit. So a guarantee will eat into that space,” said Pravin Darade, additional metropolitan commissioner, MMRDA. Darade added that most of the metro corridor had loans from the multilateral financial institution such as Asian Development Bank, Asian Infrastructure Investment Bank, Japan International Cooperation Agency. “Now we require funds for Metro 5, Metro 6, Metro 4 extension and the Dahisar- Mira Bhayander metro line,” he said.
According to MMRDA officials, the 23.5-km Thane-Bhiwandi-Kalyan (Metro 5) is estimated to cost Rs 8417 crore, while Lokhandwala-Jogeshwari-Kanjurmar (Metro 6) will cost Rs 5566 crore. The extension of Wadala-Ghatkopar-Thane-Kasarvadavali (Metro 4) up to GPO is estimated to cost Rs 2,500 crore, and the Dahisar-Mira-Bhayander line is estimated to cost Rs 6,518 crore. Collectively, the MMRDA requires Rs 23,001 crore for the metro corridors and it would have to raise a sizable sum through loans from the domestic market.