CMRL seeks funds borrowed from external agencies for Phase-II routed through Centre as state has limitation on funding

C Shivakumar @ CHENNAI:
Chennai Metro Rail is facing fund crunch to complete the works under Rs 63,246 crore Phase II project as the funds are routed through the state, which has restriction on borrowing.

The Special Purpose Vehicle Chennai Metro Rail is a joint venture company and funds were flowing directly from the Centre for the project. But after it was considered as a state project, the external borrowings are routed through the state which has restriction to spend under FRBM rules.

This has resulted in Chennai Metro Rail urging the Department of Economic Affairs to reconsider the project as a Central project work out with revised loan agreements with the multilateral agencies which will result in availing the funds without any constraint and the project will be able to gain the speed.

It is learnt from sources that there are concerns about availability of funds when the project is under State sector since there are FRBM restrictions for release of funds by State Government even though funding from external financing agencies have been tied up.  If the project is under Central Sector, fund flow of external loans is assured.  Further, for maintaining healthy debt equity ratio in its balance sheet, CMRL needs equity participation by both Union and State Governments.

In 2018 when Chennai Metro got the fund from Japan International Cooperation Agency's (JICA) modified Special Terms of Economic Partnership (STEP) without linking the same to the sanction of Union government. This was due to insistence of JICA which was keen on signing the agreement during the financial year of 2018-19. The loan was then taken as state loan through the state budget after Union Housing Ministry recommended the proposal for consideration of Department of Economic Affairs.

Earlier, Nirmala Sitharaman has hit out at the state government blaming the Centre for insufficient funds, asserting that the central government had arranged the required loan and the state has under-utilised the funds.

Chennai Metro Rail has till now spent Rs 18,500 crore for Phase-II of Chennai Metro projects. Of this it has 5,800 crore crore has been reimbursed from the lending agencies and another Rs 1,000 crore will be reimbursed in the next couple of months. Similarly, Rs 11,000 is funded directly by the state government, sources said.