Odisha Urban Infrastructure Development Fund (OUIDF), set up by the state government to carry out infrastructure projects in municipalities, will get a line of credit of nearly $100 million from Asian Development Bank (ADB).
OUIDF is awaiting approval from the chief minister’s office to avail the loan facility, government officials said.
“The finance department has already approved the borrowing proposal from ADB. We hope to get confirmation from the chief minister’s office by the end of this month to avail the line of credit.” said S K Ratho, special secretary with the housing and urban development department.
Line of credit is a lending facility which enables borrowers to avail the loan only as per requirement, subject to maximum assured sum. In this process, interest is charged only on the amount of money withdrawn and not on the entire amount. In case of ADB loan, the interest rate will be levied as per global benchmark LIBOR (London Interbank Offered Rate).
OUIDF was set up as a trust in 2012, as a fund to utilize money in creating infrastructure for water supply, sewerage, solid waste management, drainage and slum development projects undertaken by urban local bodies (ULB), statutory bodies, public sector undertakings and to attract investments, professional advice from institutions for financing such projects.
To avail the loan from ADB, the Philippines-based financial agency had proposed that about 20 per cent of total sum assured for the line of credit must be availed via commercial loans and bonds. It had advised that OUIDF could avail loan facility from institutions such as L&T Infra finance, ICICI Bank and IL&FS Urban Infra Managers Ltd. Similarly for bonds, it has proposed that OUIDF must encourage municipalities to float bonds.
It has also asked OUIDF to get a credit rating by a renowned credit rating agency. However, the state government said such proposals by ADB was not mandatory. “The proposals came as a package from ADB, but they are not mandatory to avail the line of credit. We will certainly take steps to stick to those proposals, but at present, our primary objective is to get the loan and prepare a roadmap for development of infrastructure,” said Ratho.
The state government will take steps to implement the projects via public private partnership (PPP) route, he added. The OUIDF was initially established with 25 million euro assistance provided by KfW (Germany’s Development Bank) in 2012.
