Chandigarh: No change in interest on loan sanctioned for 24x7 water supply project

Even as the Chandigarh Smart City Limited (CSCL) has stepped up its efforts to get final nod from the central government for its ambitious pan-city 24x7 water supply project, the cost of loan for the project will not increase at least till August this year.

Cost of loan means primarily the interest paid on it.

Agence Française de Développement (AFD), the French donor agency, has extended the period for loan at the same rate of interest from February to August this year.

Now, Chandigarh MC has time till August to get the agreement signed with the donor agency for the water supply project before the agency decides on increasing the interest rates.

The city had missed the original deadline of October 15 for signing of the memorandum of understanding (MoU) with AFD because all central government permissions were not obtained.

After October 15, AFD could have revised the rate of interest to be charged on the loan amount, making it more expensive for the city and consequently raising the cost of the project, but it decided not to.

“The note of key expenditure and finance committee, department of economic affairs, ministry of finance, has been circulated, which indicates the requisite approval are close at hand for the project. CSCL is also seeking comments from the forest ministry and Niti Aayog on the project,” said a CSCL official.

AFD is going to provide ₹413 crore for the project in the form of loan, which is to be repaid in 15 years. In addition to it, the European Union is also giving a grant of ₹98 crore for the project.

Before the grant is released, AFD has to sign a credit facility agreement with the department of economic affairs of the Union ministry of finance. Thereafter, an MoU will be signed between the Chandigarh MC and the donor agencies.

AFD, under the government of France, had in December approved around ₹413-crore loan and European Union sanctioned ₹98 crore to the Chandigarh MC for the first-of-its-kind ambitious 24x7 water supply project and communicated the same to the government of India. This is the first time in the northern region of the country that any city has received this much money from foreign agency for any project.

Meanwhile, the 24x7 water supply project implementation has already begun. UT administrator Banwarilal Purohit had on November 14 laid the foundation stone of 24x7 water supply project for Manimajra.

The project is aimed at switching from intermittent supply to 24x7 continuous pressurised supply system. This project will involve new waterworks with four million gallon of additional storage, 13,700 smart meters, 20km of new lines, and automated monitoring of system. The existing 37 tubewells will be phased out. The project is to be carried out at ₹162 crore, including cost of 15 years’ operation and maintenance. The work is expected to be completed by August 2023.

All about the project

Construction cost: ₹591 crore

AFD loan: ₹413 crore

EU grant: ₹98 crore

O&M cost over 20 year: ₹6,000 crore

Main aim: To reduce the non-revenue water percentage (from current 35% to within 15% only); modernise the supply system