The Kochi Metro Rail project received a shot in the arm on Friday with the director board meeting of Agence Française de Développement (AFD), a French financial agency, giving the green signal to extend to the project a Rs.1,500-crore loan.
The loan agreement is likely to be signed in January. The loan will entail an interest rate of 1.90 per cent when calculated in terms of the euro. The interest rate is likely to be about 11 per cent when converted into the rupee.
AFD will sign an agreement with the Union government as the loan will be given to the Centre. The project will then receive the loan from the Centre as budgetary allocation. AFD may write to the Centre shortly explaining the terms for signing the agreement.
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The loan will have a repayment period of 20 years with a repayment-free period of five years. More discussions on the terms of repayment are likely to be held in the coming days. Authorities are hopeful of making the provisions more lenient.
Relatively simple procedures in receiving loans prompted Kochi Metro to approach the French agency. The loan will be released in two tranches of Rs.1,000 crore and Rs.500 crore. A total investment of Rs.5,537 crore is required for the Kochi Metro. Of this, Rs.2,170 crore will be taken as loan from private agencies. A loan of Rs.1,170 will taken from the Canara Bank. The Union and State governments will have to raise the remaining amount. So far, about Rs.400 crore has been spent to acquire land and launch initial construction work of the project.