$1-billion indian line of credit
The two countries had signed a loan agreement during Indian Prime Minister Narendra Modi’s Nepal visit for the 18th Saarc Summit.
The bank last week forwarded a proposal stating measures to simplify the procedures. “We are now holding talks with line ministries on the proposal,” said a senior Finance Ministry official, adding there is a need for reducing the project evaluation time and ensuring timely payment from the financer.
According to Nepali officials, it takes a long time to get the Exim Bank’s approval even after the Nepali side forwards the project design. “It is difficult to get the funding even six months after awarding the contract,” said another official. “As the contractor does not start work before receiving the mobilisation fund, work has stalled on some projects.”
The existing line of credit ($350 million) is being used in 11 road projects, rehabilitation of 15MW Devighat Hydro Power Project, 27MW Rahughat HEP, Muzaffarpur- Dhalkebar cross-border transmission line and rural electrification projects, among others. India has put in place flexible terms and conditions for the new line of credit, including interest rate and commitment fee.
The interest rate has been set 1 percent, while the commitment charge has been reduced to 0.25 percent from 0.5 percent. India will not charge any service fee. Earlier, it charged 0.25 percent.
The southern neighbour has reduced the quantity of India-made goods to be used in the project and approved Indian-Nepali joint-venture contractors.
Secretary at the Ministry of Physical Infrastructure Tulasi Sitaula said as the main objective of the Exim Bank is to ensure Indian goods and services are used in projects where the funds go. “Therefore, there must be simplification in the procedure to get desired results,” he said.
The government has almost finalised the projects in which the newly announced soft loan will be used. They include Budhigandaki Hydroelectric Project, Mahakali III Irrigation Project, Koshi Pump Canal, and a multilane motorable bridge over the Mahakali River in Mahendranagar, according to the Finance Ministry.
Source : eKantipur