KATHMANDU: The government informed a visiting Indian delegation that Nepal could seek additional soft loans from the southern neighbour for the Kathmandu -Tarai Fast Track road project that is expected to be developed by an Indian consortium company.
The government has assured the Indian consortium of Infrastructure Leasing and Financial Services (IL&FS) Transportation Networks, IL&FS Engineering and Construction and Suryavir Infrastructure Construction of providing soft loans in negotiations that concluded last week.
Although Finance Ministry has said it is yet to commit financing to the developer, officials at the Ministry of Physical Infrastructure and Transport said the negotiations concluded based on the Finance Ministry’s assurance that it would finance $750 million in loans at 3 percent interest rate, and additional $150 million in grant.
During a meeting held to review the implementation of the Indian line of credit between Nepali and Indian officials here on Monday, the Nepali side indicated Nepal could seek further assistance from the southern neighbour if it has to provide financing to the developer. “We have informed them about it,” said Madhu Marasini, chief of international economic cooperation coordination division at the Finance Ministry.
An Indian delegation led by a joint secretary of the External Affairs Ministry and represented by India’s Exim Bank sat for the review meeting with the Nepali team on Monday. Finance Ministry officials say allocating resources from the existing line of credit is impossible given commitments have already been made elsewhere.
Of the $1 billion line of credit extended by Indian Prime Minister Narendra Modi, the government has identified projects related to roads, bridges and irrigation for spending half of the aid ($500 million).
Although the government was supposed to fund half of the fund in energy projects, with Budhi Gandaki hydropower project being the likely recipient, the government is now considering providing that money to the Fast-Track project.
However, Marasini said with the Indian government announcing to convert 40 percent of the Modi-announced credit into grant, the amount could be used for reconstruction. “In this context, we may have to seek additional resources from India,” Marasini said at the Parliamentary Development Committee meeting last week.
According to Marasini, they also agreed on using an additional $1 billion announced at the International Conference on Nepal’s Construction held on June 25 in reconstruction in line with the recommendation of the Post-Disaster Needs Assessment (PDNA).
The two sides also discussed progress made towards the implementation of the projects financed by the previous line of credits extended by India.
