EU Investment Bank to step up project funding in India

The European Investment Bank (EIB), the financial arm of the 28-member European Union, is planning to step up financing projects in India, officials of the bank said here.

“The bank is in talks with Indian officials regarding several projects, including financing the Lucknow Metro project,” Sunita Lukkhoo, Regional Manager, South Asia at EIB, told visiting Indian journalists.

The Lucknow Metro project, one of the flagship programmes of Uttar Pradesh Chief Minister Akhilesh Yadav, is proposed in two corridors — North-South and East-West.

The 23-km North-South corridor, which would connect Lucknow airport to the city, is being undertaken in the first phase and is estimated to cost over ₹7,000 crore.

Lukkhoo did not reveal how much money the bank is planning to lend to the project.

“Another deal in the pipeline is the water supply project of the Madhya Pradesh government. The plan is to co-finance the project with the ADB (Asian Development Bank),” she said.

“Financing the water supply project in Delhi is also on the cards. All these projects are being implemented by the public sector.”      

Recently, Luxembourg-based EIB, the world’s largest multilateral lender and borrower, had granted €45 million ($49 million or around ₹300 crore) to India’s biggest lender, State Bank of India, for on-lending to private businesses in the country. It was the second tranche of a €200 million loan approved earlier. The first tranche of €55 million was signed on June 25, 2014.

EIB officials said the bank is giving greater importance for long-term financing in developing economies, including India. Lukkhoo said since 2011, the focus of its lending in India and other Asian countries was on three areas — environmental sustainability, social and economic infrastructure and local private sector.

Patrick Walsh, Director of Global Partners, EIB, also sounded optimistic about stepping up the India business. “We had some interesting meetings last week with some Indian representatives. There’s a huge range of potential projects we can work on. We are going to explore that with our colleagues in India,” he said.  

When asked which are the sectors that the bank is focused on, he said: “We are looking at sectors involved in improving climate and climate change, small and medium enterprises and developing infrastructure, especially metros.”

At the end of 2014, the bank has lent €5.35 billion via 73 loans in 15 Asian countries. Of this, the largest share, 39 per cent, went to China, with India coming second with 19 per cent. In 2013, the bank signed on two projects in India — Exim Bank of India Climate Change (€150 million) and Srei Climate Change (€40 million).

As of today, EIB has committed €1.07 billion loans to India for eight projects, including the €200 million SBI loan and another €200 million to India Infrastructure Finance Company Ltd, to finance projects that will contribute to the mitigation of climate change in the country.     

The EIB has been active in Asia since 1993 under mandates granted by the EU Council and the European Parliament.

During this period, the EU bank has signed contracts in the region, involving finance totalling €5.6 billion.

The writer was in Luxembourg at the invitation of the European Commission

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