India, Germany to sign Rs 365 crore loan pact for urban infrastructure

NEW DELHI: India and Germany will sign an agreement tomorrow for Rs 365-crore loan facility to focus on urban infrastructure development in the state of Odisha.

"The German government-owned development bank, KfW, will sign a loan agreement worth 50 million euro (about Rs 350 crore) and a Financing Agreement for project development and capacity building providing a grant of 2.5 million euro (about Rs 15 crore) with the Government of India in Bhubaneswar on August 2, 2012," the German Embassy said in a statement.

The agreement will enable the state government to boost urban service delivery in the towns of Odisha in a manner that is both financially and environmentally sustainable, it said.

The pact will be signed by Department of Economic Affairs Joint Secretary, Prabodh Saxena, and Director KfW office in India Oskar von Maltzan, in the presence of Odisha Chief Minister Naveen Patnaik.

To manage the growing urbanisation of the state in a planned manner, the Odisha government is creating a dedicated institutional framework for urban financing that will support municipal infrastructure development by combining financing with technical assistance and capacity building.

With assistance from Germany's KfW, it has established the 'Odisha Urban Infrastructure Development Fund' (OUIDF) as a fully owned trust by the Odisha government, under Housing and Urban Development Department (HUDD).

"OUIDF has been set up with the goal of developing sustainable financial structures that will effectively link external, non-budgetary sources of finance and capital markets with the financing needs of Urban Local Bodies (ULBs)," the statement said.

OUIDF will engage an Asset Management Company (AMC) through a competitive bidding process, which will provide technical support for the implementation of the OUIDF's projects and manage its day-to-day business, it added.