In a setback to the grand plans of the State Government, the Korea EXIM Bank that had come forward to offer financial assistance to establish Vizag Metro Rail has now backed off due to unknown reasons.

KEXIM Bank had offered to lend the money at an interest rate between 6.5 per cent to 7 per cent for a repayment tenure of 20 years with 5 years moratorium. AMRC had also appointed a financial adviser or loan arranger for the purpose.

 “Now that KEXIM has exited we have decided to approach AIIB and New Development Bank. We don’t know why the Korean Bank has backed off”

Quoted by a Senior Bureaucrat in the State Government who is dealing with infrastructure projects.

AMRC had embarked on an innovative PPP model to keep the Metro rail project rolling. Under ‘innovative PPP model’ for Vizag Metro the government would bear 51 per cent of the total costs by creating civil infrastructure and the private investor would invest 49 per cent of the costs in acquiring rolling stock like rail coaches, electrification and mechanical works, Operation & Maintenance (O&M) for a prescribed period.

The total cost of Vizag Metro rail project excluding land is Rs 8,300 crore. In the government funding model that was envisaged earlier, the State government burden would be 80 per cent which comes to Rs 6,640 crore. In the innovative PPP model, State government burden would be 51 per cent which comes to Rs 3,780 after a grant of 10 per cent from the Centre.

For the State Government component, AMRC had approached various Indian and International Financial Institutions. Of all the other financial institutions AMRC had approached, KEXIM Bank had come forward to offer the loan at a lower interest rate.

However, KEXIM backed off due to unknown reasons.