The Hindu : Kerala / Kochi News : ADB to consider loans for cities this week

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Wednesday, Dec 14, 2005

Kerala

Kerala - Kochi

ADB to consider loans for cities this week

Staff Reporter

Agreement may be signed in January

KOCHI: The governing body of the Asian Development Bank (ADB) will consider the Rs. 1,400-crore loan to five municipal corporations of the State this week.

The State authorities hope to ink the loan agreement in January, said S.M. Vijayanand, Secretary, Local Self-Governments (Rural).

Though the funds can be had as soon as the agreement is signed, the State will be availing itself of the money only after six months. This is because the groundwork for the projects to be implemented using the money has to be completed.

If the funds remain unutilised, the State will have to pay commitment charges to the bank, under the loan agreement. Mr. Vijayanand said this came around 0.75 per cent of the unused funds.

Mr. Vijayanand and P. Kamalkutty, Secretary, Local Self-Governments (Urban), along with technical officers of the Kerala State Urban Development Project, interacted with the civic representatives of the Kochi Corporation for dispelling doubts regarding the loan.

The corporation will get a Rs. 185-crore loan for urban infrastructure development projects and another Rs. 20 crores for a poverty alleviation project.

The interest rate will be based on London Inter Bank Offered Rate (LIBOR), which is 4.9 per cent now.

The rate is subject to fluctuations and will be reviewed every six months, Mr. Vijayanand said.

User fee

Replying to questions of councillors, Mr. Vijayanand said the powers of the corporation council would not be curbed.

The right to decide on introduction of user fee and increase in tariff rested with the corporation and the council could decide not to impose user fee if it could find other revenue sources.

On the contentious issue of phasing out public taps, Mr. Vijayanand said it was a case of policy decision, which had to be taken by the State Government. The Government could decide to maintain the taps or phase them out, he said.

Mr. Kamalkutty explained that the State Government would reimburse counterpart financing, which had to be done by the corporation, at the time of repayment of loan. According to an initial estimate, the corporation will have to spend Rs. 4 crores annually as counterpart financing.

He also clarified that the rights of the corporation would not be usurped, as only the projects approved by the council were being implemented with the loan.

Mercy Williams, Mayor; C.K. Manisankar, Deputy Mayor, and S. Sudarsanan, Corporation Secretary, were present.

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