German bank to fund urban development in Odisha

German bank to fund urban development in Odisha

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The Centre signed a loan agreement of Rs 365 crore with German government-owned development bank, KfW, for urban infrastructure development in Odisha. The fund will be utilized for water supply, sewerage, solid waste management, drainage and slum development projects in urban areas, a housing and urban development department statement said. Prabodh Saxena, a joint secretary in Union ministry of finance and KfW India director Oskar von Maltzan inked the pact at the state secretariat in Bhubaneswar.

Under the agreement, KfW will give a loan of 50 million Euros (Rs 350 crore) and technical assistance grant of 2.5 million Euros (Rs 15 crore). The Centre will pass on the loan amount to Odisha and the state government in turn will give it to Odisha Urban Infrastructure Development Fund (OUIDF), a fully government-owned trust, in a 50:50 ratio of loan and grant.

Urban local bodies, development authorities, Odisha State Housing Board and private developers can access the fund, which provides a viability gap funding up to 50 per cent in case of any gap in the commercial viability of a project. The fund is expected to encourage private investors to avail themselves of this funding to set up projects on public private partnership (PPP) basis.

A trust headed by the chief secretary will manage the fund while housing and urban development secretary will head the project executing agency. The trust will be provided with technical assistance by an asset management company, which will be selected through competitive bidding, the government said.

The loan will be drawn in four years starting from the current fiscal. While the state will draw 2.5 million Euros in the first year, it will take 10 million Euros in second year, 15 million in third year and 22.5 million Euros in the fourth year.

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