Infrastructure Leasing & Financial Services (IL&FS) has been unable to draw the total $200 million loan sanctioned by the World Bank due the delays in various projects for which the funds were set aside. The delays were due to the slow decision making process of public counter parties dealing with the company.
The World Bank had sanctioned a loan of $200 million to enable IL&FS to on lend the funds to various sub projects in diverse sectors of infrastructure. The World Bank has also sanctioned $5 million to the government for on lending to the counter parties dealing with IL&FS on specific projects.
In 1996-97, the documentation regarding the financial assistance provided by the Bank and all conditions precedent to the draw down of the loan were completed. However, IL&FS has only been able to draw down $25 million. The directors report of IL&FS states, the World Bank has appreciated the steps taken by IL&FS to institutionalise all processes relating to project implementation as had been agreed with the Bank. Although there has been a delay in the draw down and utilisation of the World Bank Line of Credit, it had noted that this was inevitable, given the slow decision making process of public counter parties dealing with the company,
The draw down of the first tranche of $25 million has been deposited in a special account denominated in US dollars. IL&FS has entered into an agreement with Canara Bank for depositing the funds with an overseas branch and obtain countervailing rupee fund in India. The loan has been guaranteed by the government of India.
The first project eligible for funding from the World Bank Line of Credit is the Panvel by pass project. Due to the change in finalisation of certain project parameters, the execution of the project has been delayed.
The Panvel by-pass project framework has been restructured to specify the right to collect toll for a fixed period of 30 years. The scope of the project has also been extended to include the link road for the Jawaharlal Nehru Port Trust.
Interestingly, money raised for the Tirupur Area Development Project has not been disbursed. IL&FS had raised $25 million by way of floating rate promissory notes from the US Capital market under a programme of US AID. IL&FS has deposited the money in an overseas branch and obtained countervailing rupee funds in India. The proceeds have been kept in an escrow account pending disbursement.
