The Hindu 13.12.2010
ADB team to visit city next month
Staff Reporter
| The bank may sanction ‘soft loan' of Rs. 300 crores |
The experts' team to study the infrastructure projects
VMC plans to seek loan from banks also
VIJAYAWADA: A team of experts from the Asian Development Bank (ADB) would visit the city in the first week of January to study the feasibility of the projects being planned by the Vijayawada Municipal Corporation (VMC). The ADB would sanction a soft loan to the Corporation if the experts' team was satisfied with the proposals.
The team comprising national and international experts would study the infrastructure projects being planned by the Corporation. Municipal Commissioner G. Ravi Babu held discussions with the ADB higher-ups at an international conference at Manila in Philippines a couple of days ago. They were convinced with the proposals for projects, and were keen on funding infrastructure projects. The major projects include Bus Rapid Transit System (BRTS), housing, municipal solid waste management, storm water drains and slum development, he said.
The Corporation's application for loan is pending with the ADB. The applications are in final stage, and the study by the experts' team would complete the process. The Corporation would receive not less than Rs. 300 crore if the proposals are accepted. The loan could be used as 30 per cent share of the VMC in projects taken up under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) programme, Mr. Ravi Babu said.
‘Gap funding'
The ADB loan, which is popularly known as ‘gap funding' or ‘sub-sovereign lending', is aimed at bridging the gap between availability of funds and project cost. The Corporation, in 2008, proposed to take a loan of Rs. 200 crore from the ADB to maintain the momentum of the developmental works taken up under JNNURM.
A team of officials from the ADB visited the VMC two years ago to study the ‘financial health' of the Corporation, and they reportedly expressed satisfaction over the Corporation's fiscal status. They estimated that the VMC was eligible for a loan of Rs. 300 crore. As one of the conditions for extending the loan, the ADB had asked the Corporation to escrow its revenues generated through realisation of charges for water supply and underground drainage schemes in the city. And, the VMC too was ready to pledge to the ADB its revenues generated through water supply and underground drainage for 15 years.
Later, the Corporation explored the chances of taking loan from some nationalised and scheduled banks. The bankers strongly favoured a counter-guarantee by the State government. The issue is still pending.
