B’lore Metro turns dearer by Rs 600 cr

B’lore Metro turns dearer by Rs 600 cr
UTI Bank Does Fresh Appraisal And Brings Funding Agencies Together
The Economic Times

PERSISTENT delays have already made Bangalore’s dream metro project more expensive by about 12%, pushing the cost up from projected Rs 4,998 crore to Rs 5,605 crore. The good news is both the state government and the lenders are showing interest in taking the project forward. UTI Bank, which freshly appraised the project, has organised a roadshow for banks and institutions in Mumbai next week, to get them on board.

The project, in fact, has in-principle commitments from 25 banks for a Rs 3,400 crore line of credit, while the actual loan component has been worked out to a more modest Rs 2,953 crore. The Urban Development Ministry is also expected to offer its complete backing to the project shortly to enable financial closure before end December.

Physical work on the 33-km first phase starts next March/April, Bangalore Mass Rapid Transit (BMRTL) managing director K N Shrivastava told ET. The 50-km second phase, which connects the two tech hubs of Electronic City and International Tech Park in Whitefield, gets started in 2009 even before the first leg is complete. Leveraging on the experience gained in the first half, and because its an entirely elevated stretch of metro, the second half will see quicker completion, Mr Shrivastava added.

According to the number crunching done by UTI Bank, the project cost has risen because land prices have nearly doubled from the earlier estimated Rs 360 crore to Rs 600 crore. The indicative interest rate has been pegged at 8.75% for a 15 year term loan while the line of credit from insurance companies and provident fund agencies comes for 25 years at 9% interest.

Since Delhi Metro has been considered the benchmark for financing costs, the difference in interest rates will be jointly borne by government of Karnataka and the Centre.