German bank to sanction ₹2,500 crore for metro rail.

German bank KfW has agreed to sanction a loan of ₹ 2,500 crore for the much-publicised metro rail project in the city. With this, the State government is contemplating starting the work shortly.

The government proposes to construct two corridors with a length of 26 km. While one corridor will come up covering 12.5 km, the other will cover 13.5 km.

Another metro project, which was planned for Visakhapatnam, would be taken up on a Public Private Partnership (PPP) model. The government is proposing to construct two corridors in Visakhapatnam. The other two corridors are from Gurudwara to the Old Post Office and Tatichetlapalem to Park Hotel. The Visakhapatnam project is envisaged for completion by 2019.

Municipal Administration Minister P. Narayana on Thursday said the the government was planning to complete the phase-I in Vijayawada before 2018.

After opting out of the proposal to approach the Japanese International Cooperation Agency (JICA) for loan, the State government is heavily banking on funding by the German and French development banks KfW and Agence Francaise de Development (AFD) to put the Metro project on track.

The government is expecting a loan of ₹4,000 crore from these banks, which have in-principle approved the loan. They are yet to work out individual contributions.

The Amaravati Metro Rail Corporation (AMRC) held talks with various external funding agencies, including the European Investment Bank, World Bank and Asian agencies. The government also explored the ‘green route’ and planned to tap funds through the Climate Bonds Initiative, a U.K.-based non-profitable organisation.

The government opted out of JICA loan as it made clear that the soft loan would be 'tied' loan and insisted that 30 per cent of the loan component must be utilised for procurement of the rolling stock from Japan.

THE HINDU