Centre to Fund 65% of Chennai Metro Phase 2 Project, Says Finance Ministry.

The central government will cover 65% of the estimated ₹63,246 crore cost for the Chennai Metro Phase-2 project, amounting to over ₹41,000 crore, the Finance Ministry announced on Saturday. The Union Cabinet approved the construction of three corridors under this initiative, aimed at enhancing urban transport in the city.

The financial breakdown includes a loan of ₹33,593 crore from the Centre, alongside an additional ₹7,425 crore in equity and subordinate debt. The remaining 35% will be funded by the Tamil Nadu government.

According to the statement from the finance ministry, loans obtained from multilateral and bilateral development agencies will be treated as loans to the central government and disbursed directly to Chennai Metro Rail Ltd (CMRL) from the Central Government's budget. Previously, the project was primarily a state sector initiative, with the Tamil Nadu government responsible for nearly 90% of the financing.

The central government had only financed 10% of the project costs under the Metro Rail Policy of 2017, but it had assisted in mobilizing ₹32,548 crore in loans from various agencies, of which ₹6,100 crore has been utilized so far.

The Cabinet's recent approval will allow the Tamil Nadu government to reallocate budgetary resources, estimated at ₹33,593 crore, towards other development projects.

Following the approval, the Ministry of Finance plans to engage with international agencies such as the Japan International Cooperation Agency, Asian Development Bank, Asian Infrastructure Investment Bank, and New Development Bank to renegotiate loan and project agreements.

CMRL will be responsible for repaying the loans, which will commence after a five-year moratorium upon project completion. If CMRL faces repayment difficulties, the state government will be obligated to provide the necessary financial support.

ET