Bhubaneswar: For the first time, a German development Kreditanstalt fur Wiederaufbau (KfW) will provide a loan amounting to 50 million Euros (nearly Rs 350 crore) to Orissa Government for financially strengthening the urban local bodies (ULBs) in the State.
Besides, grant assistance to the tune of Rs 2.5 million Euros (more than Rs 17 crore) will also be given by the bank. The loan agreement is scheduled to be signed between Chief Minister Naveen Patnaik and German Consul-General here August 2.
Once the deal is signed, Orissa will become the second State after Tamil Nadu to receive such a huge loan from a foreign origin bank. Requisite permission for the loan has already been granted to the state Government by the Union Department of Economics Affairs two weeks ago, an official said.
The loan is said to be given to the State for giving a boost to nearly 20 mega projects of the ULBs related to potable water supply, housing and urban development, urban transport, sewerage and drainage system.
There will be four sets of agreements. KfW will sign two agreements with the Orissa Government. According to procedure, the State Government will have to repay the loan to KfW within 15 years at rate of 2 per cent interest.
After receiving the loan, the State Government will forward it to the Orissa Urban Infrastructure Development Fund (OUIDF), a trust headed by Chief Secretary B K Patnaik.
Additional Secretary (Housing and Urban Development) Sanjeeb Kumar Mishta said, “We are contemplating to receive a loan close to Rs 350 crore entirely to strengthen financial condition of 103 ULBs in the State. In addition, we will also get nearly from the bank”.
Mishra further said an asset management company would soon be roped in by the HUD Department for the management of urban development projects.”The funds will be used to improved basic amenities like potable water, housing, sewerage, drainage and roads in all the cities,” he added.
There are 103 ULBs including three municipal corporation ( Bhubaneswar, Cuttack and Berhampur ), 37 municipalities and 63 notified area councils (NACs).
The State Government has already allotted a sum of Rs 21 crore for several urban development related projects to the several urban development related projects to the ULBs in the current fiscal 2012-13.