Government agrees to terms of the bank, to give counter guarantee
Stalled property acquisitions at Sultan Bazar and at a few other sections, shifting of pipelines and road-widening for the Metro Rail project will be now taken up with the Government permitting the Hyderabad Metro Rail (HMR) Limited to take a term loan of ₹ 236.50 crore from Andhra Bank.
The Government has not only given a counter guarantee to the loan agreeing to the terms and conditions of the bank, but has also agreed to provide a budgetary support of ₹ 59.14 crore for margin money. It had also exempt the HMR from having to pay 2 % guarantee commission payable to it.
In case the HMR fails to make any payments due to the bank, the Government has also agreed to make the loan repayments. The loan is for 10 years with an additional three years’ moratorium and the Government has advised the HMR to go for outside funds since it was facing a budgetary crunch.
The HMR, the special purpose vehicle of the Government, was formed as a facilitating body to help discharge the Concession Agreement (CA) obligations on behalf of the Government to provide right of way to the L&T Metro Rail Hyderabad (L&TMRH) building the project after it bagged the contract.
Initially, the HMR touched base with funding agency HUDCO but after holding detailed discussions, the Government suggested that loan be taken from Andhra Bank.
With the project reaching the advanced stage and with at least two sections of the three-corridor project to be opened later this year — Nagole to Begumpet on Corridor Three and Miyapur to S.R. Nagar on Corridor One, most of the land acquisition and road widening across the project routes has been completed, hence reduced funds, claim senior metro officials.
From ₹ 500 crore a year in recent past for shifting of utilities, road-widening and to take over properties, the funds allotted to the HMR came down to ₹ 100 crore last year forcing it to seek the Government’s help to look for other funding options.
“This loan is only to supplant whatever the Government is giving to provide right of way in a few remaining sites so that we can expedite the work in this season,” explained HMR Managing Director N.V.S. Reddy.