The second phase of Chennai Metro will be treated as ‘Central Sector’ project, Finance Ministry said on Saturday. This means the central government will bear the majority of expenditures.
‘The Central Government now will be financing almost 65 per cent of the estimated cost of Chennai Metro Phase 2. This financing will include the entire required loan of ₹33,593 crore besides the equity and subordinate debt of ₹7,425 crores,” the statement said. The balance 35 per cent of the estimated cost will be financed by the State Government. Till now the project has been the ‘State Sector’ project.
With this, the Finance Ministry will approach the bilateral and multilateral agencies, namely the Japan International Cooperation Agency, Asian Development Bank, Asian Infrastructure Investment Bank, and New Development Bank, to re negotiate the loan and project agreements and related documents and treat the loans as loans to the Central Government. Also, the loan flow route will be changed directly from the respective agency to the Central Government and from the Central Government’s budget to CMRL (Chennai Metro Rail Limited) as the pass-through assistance.
- Read: Sigh of relief for TN with Union Cabinet approving ₹63,246 crore for Phase II of Chennai Metro
Housing & Urban Affairs Ministry will be designated to act through CMRL as the project executing agency in place of the State Government through CMRL as the project executing agency. The process for these changes to the loan and project agreements and the related documents has been initiated and will be completed expeditiously in coordination with the State Government.
Repayment of loan
The responsibility for repayment of the loan will be on the company. The repayment would normally start after a moratorium of at least five years, i.e., more or less after completion of the project. “In the event of CMRL not being in a position to repay the loan, it would be the obligation of the State Government to provide financial support to the company to enable the repayment in those years,” the statement said.
So far, the project has been implemented as a ‘State sector’ project, with the responsibility for the project financing being primarily on the Tamil Nadu State government to almost 90 per cent of the estimated project cost. The role of the Central Government was to finance 10 per cent of the project cost, excluding land cost and a few other items as per the Metro Rail Policy 2017. However, the Central Government has also assisted the State Government in the mobilisation of ₹32,548 crore as loans from bilateral and multilateral agencies to the State Government directly, out of which around ₹6,100 crore has been utilised so far.
The Union Cabinet’s approval has freed up the State Government’s budgetary resources to finance other development activities to the extent of ₹33,593 crore.
Once Phase II is fully operational, Chennai city will have a total Metro Rail network of 173 km. The Phase II Project comprises the following three corridors - Madhavaram to SIPCOT (45.8 km with 50 stations), Lighthouse to Poonamalle Bypass (26.1 km with 30 stations, and Madhavaram to Sholinganallur for a length of 47 km with 48 stations.