Economy

Asian Infrastructure Investment Bank mulls $2.2-billion loan for Indian infra projects

Venkatesh Ganesh/P Manoj Mumbai | Updated on November 15, 2019 Published on November 15, 2019

AIIB Vice President and Chief Investment Officer D J Pandian

India is the second largest share holder in AIIB

Beijing-based Asian Infrastructure Investment Bank (AIIB) is evaluating loans worth over $2.2 billion for funding power transmission and distribution projects in Assam, metro rail projects in Chennai, Mumbai and rural water supply system in Karnataka, the multi-lateral lender’s vice-president and chief investment officer DJ Pandian has said.

AIIB has also started preliminary discussions with the Indian government to fund electric vehicle charging stations in the country along with the World Bank and the Asian Development Bank, Pandian said.

“The moment they come up with a proper policy and put forward their request, we will be looking into that,” he said.

Since starting operations in 2016, AIIB has invested $2.894 billion in 13 projects in India, including a $500-million loan approved last month to ease congestion in Mumbai- the country’s financial hub- and another $75 million to Tata Cleantech Capital Ltd for on-lending to renewable energy projects.

AIIB has also invested $50 million last month in Oriental Infra Trust, an infrastructure investment trust sponsored by Oriental Structural Engineers Pvt Ltd and Oriental Tollways Pvt Ltd with five operational road assets, consisting of four toll-road assets and one annuity road asset, in the states of Maharashtra, Madhya Pradesh, Uttar Pradesh and Karnataka.

India is the second largest shareholder in AIIB but is its largest borrower. “In the last three years, we have approved 55 projects with a total investment of $10 billion. Of this, close to $3 billion or 30 per cent is in India itself. Out of the $3 billion, about $1 billion or 30 per cent is in Mumbai alone. We are fortunate to get such good quality projects in Mumbai,” said Pandian.

Pandian said that AIIB is finalising a long-term corporate strategy. “We want to lend $10 billion a year by 2025. Imagine, out of $10 billion, 30 per cent coming to India as per current trends,” he said.

AIIB will start appraising a $400-million loan for strengthening electricity distribution in Assam and an equal amount in two phases for a transmission project in the eastern State.

The electricity distribution project may not be financially viable, Pandian said. “But, that’s a public good, the government has to do it. That’s why we want guarantee from the government of India,” he said.

Chennai Metro

The bank is also negotiating an $800-million loan for Chennai metro, a $400-million loan for a rural water supply system in Karnataka and a few road projects, he said. AIIB will not fund coal-related projects such as power stations. “India depends on coal, it’s a different issue; but India is also giving a big push to renewable energy,” said an official, adding that the bank has funded a green grid in Tamil Nadu to evacuate power generated from wind projects.

Urban mobility is a big focus area for the bank, said Pandian.

The $500-million loan for the Mumbai Urban Transport Project (MUTP) will help fund construction of a four-lane road stretching 64 km between Virar (the last point on the western line of sub-urban rail) and Dahanu. This will extend the sub-urban railway service to link peripheral areas with Mumbai.

The 20-year loan will also finance construction of a 28 km-long two-lane sub-urban rail corridor between Panvel (the last point on the harbour line of the sub-urban network) and Karjat to cater to commuters in the area.

The loan will also be used to install control measures such as track segregation by fencing or using reinforced concrete walls and pedestrian crossings over or under the tracks on 36 priority sections of the existing Mumbai sub-urban rail network.

The $75-million loan to Tata Cleantech Capital will help mobilise private capital into renewable energy, power transmission and water infrastructure.

Pandian said that AIIB will finalise a digital infrastructure policy in the next six months that envisages investment in hardware and software.

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Published on November 15, 2019
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