MMRC seeks additional loan from banks for Mumbai Metro Line 3 Project

Mumbai, India (Metro Rail Today): In an effort to secure necessary funds for the Mumbai Metro Line 3 project, the Mumbai Metro Rail Corporation (MMRC) is in the process of raising an additional Rs 1000 crore loans through bank. This move comes as the anticipated disbursement of Rs 3,200 crore from Japan's JICA is pending final approval from the central government, causing a delay in the project execution.

To date, the MMRC has successfully raised Rs 2,200 crore through a loan facility provided by the Power Finance Corporation, earning an AA- (CE) rating from CRISIL. The CE rating is based on the understanding that the Maharashtra government will extend financial support if required.

According to CRISIL, the MMRC has devised a plan to raise an additional Rs 1000 crore through a long-term loan facility. Repayment for this sum, as well as the previous borrowings, will be structured as a bullet payment due on the final repayment date, with an expected tenor of around 13-15 months from the date of disbursement. The loans are anticipated to be disbursed by the Japan International Cooperation Agency (JICA), which has already granted an 'in principle' approval. However, the final disbursement is contingent upon the government's approval of the revised project cost, as well as project appraisal and approval by JICA and the Government of Japan.

Although JICA's facility approval was initially expected by June 2023, the final approval from the Government of India is still pending for the revised Detailed Project Report (DPR). As a result, the disbursement of the JICA facility is now projected to occur within the next six months, as stated in CRISIL's rating review.

In the event of any delays in receiving funds from JICA, the MMRC will duly notify the Maharashtra Government 30 days prior to the bullet principal servicing date. The Maharashtra Government is responsible for crediting the loan account three days before the due date. Any modifications to the transaction structure and compliance will be factors influencing the project's rating sensitivity.

As the MMRC strives to secure the necessary financial resources, the delay in disbursement highlights the importance of government approvals and cooperation in ensuring the smooth execution of the Mumbai Metro Line 3 project.