Removal of JICA from list of multilateral lenders may escalate the cost of key TN projects

C Shivakumar

Chennai:

The removal of Japan International Cooperation Agency from the list of
multilateral lenders is going to hit Tamil Nadu government more as the
costs of the new projects, including second phase of Chennai Metro
Rail, are likely to escalate.



A senior representative of Japan International Cooperation Agency
Ichiguchi Tomohide told Express that there will be a cost escalation
of new projects as the removal of JICA from the list of multi-lateral
lenders will deny deemed export benefits to projects funded by the
agency.



Deemed Exports refer to those transactions in which goods supplied do
not leave country, and payment for such supplies is received either in
Indian rupees or in free foreign exchange. The legal agreements
provide for tender evaluation without including customs duty

on the supply of goods to projects financed by multilateral agencies.



“This should concern the project implementing agencies,” said Tomohide
while denying that the projects like Ponneri satellite township and
Chennai Bangalore Industrial Corridor will face any impact.



He said that JICA is currently examining the impact the new projects
will have due to the levy of duties.



“We will not be affected. The Indian side which is borrowing will have
to bear the financial burden,” he said.



It is likely that projects like the second phase of Chennai Metro Rail
may be hit due to cost escalation, said a Chennai Metro Rail source.
However, he ruled out that the first phase of Chennai Metro Rail
project would be affected.



However, he said the detailed project report is still being worked out
for the second phase of Chennai Metro Rail and it is too early to
comment on that.



Interestingly, then chief minister of Tamil Nadu J Jayalalithaa has
urged Japan International Cooperation Agency (JICA) to join her
government as a partner in implementing nfrastructure projects under
‘Vision Tamil Nadu 2023’.



JICA has also played a key role in formulating Tamil Nadu Investment
Promotion Programme. The major projects implemented with the Agency’s
assistance in the State include Tamil Nadu Afforestation Project-II,
Hogenakkal Water Supply and Fluorosis Mitigation project, Tamil Nadu
Urban Infrastructure Project, Tamil Nadu Biodiversity Conservation and
Greening project, and Chennai Metro Rail project.