March 11, 2016
New Delhi, March 11, 2016: Japan International Cooperation Agency (JICA) today signed an agreement with India Infrastructure Finance Company Limited (IIFCL) to provide 50 billion Japanese Yen (approx. Rs. 2,866 crore) Official Development Assistance (ODA) loan as the principal for the implementation of Public-Private Partnership Infrastructure Financing Project. ODA loan conditions are very concessional, i.e. the repayment period is fourteen years after the grace period of six years, and the rate of interest is floating rate of the London interbank offered rate for six month deposits in Japanese Yen. The agreement was signed between Mr. Takema Sakamoto, Chief Representative of JICA India and Mr. Sanjeev Ghai, Chief General Manager of IIFCL at the IIFCL office. The assistance will promote Public-Private Partnership based infrastructure development mainly in the field of non-fossil power projects by providing long term finance to private/public enterprises and the banks/public financial institutions to onlend to private/public enterprises for investment to viable infrastructure projects, thereby contributing to sustainable economic development in the country.
Speaking on the occasion of Loan Agreement signing, Mr. SAKAMOTO said, "India is well positioned to leapfrog technology in infrastructure projects and JICA's assistance will facilitate mobilization of funds for high quality infrastructure development. Productivity in Japan is attributable to the ready availability of infrastructure, and improved infrastructure in India will lead to increase per capita productivity and to improve quality of life as well."
JICA has accumulated ODA loan commitment of JPY 4 trillion in total, which is equivalent to about Rs. 2.3 lakh crore, by FY2013/2014, for development of transportation, energy, water & sanitation, agriculture & forestry and education sectors in India. The loan to IIFCL is one of the outcomes of efforts targeting to realize 3.5 trillion Yen of public and private investment and financing from Japan, including ODA, to India within five years, announced by Prime Minister Shinzo Abe at the Summit Meeting with Prime Minister Narendra Modi on Sept. 1, 2014.
The Government of India has envisaged an investment of USD 1 trillion in infrastructure under the 12th Five-Year Plan from 2012 to 2017 in order to achieve economic growth of 8.4% per annum in the period. 47% of the envisaged investment is earmarked for financing by the private sector. Public Private Partnerships (PPPs) present a very suitable option in meeting these targets, not only in attracting private capital in creation of infrastructure but also in enhancing efficiency of delivery of services. It is worthy to be recalled that creating better environment for infrastructure investment by private sector is essential for sustainable development.
The loan will be available to mainly solar-power, wind-power, transmission projects, etc. which are expected to attain environmental friendly economic growth.
India Infrastructure Finance Company Ltd (IIFCL) is wholly-owned by the Government of India; it provides long term finance to infrastructure projects. Projects funded by IIFCL relate to transportation, energy, water, sanitation, communication, social and commercial infrastructure across India. IIFCL commenced operations in 2006 and has sanctioned Rs 54,148 crore across 318 projects, as of March 2014, and accords overriding priority to financing Public Private Partnership (PPP) projects.
Established, by a specific law, as an independent administrative institution under the Government of Japan, the Japan International Cooperation Agency (JICA) aims to contribute to the promotion of international cooperation, as a sole Japanese governmental agency in charge of ODA implementation. JICA works as a bridge between Japan and emerging countries, and provides assistance in forms of loan, grant and technical cooperation so that the emerging countries can strengthen their capabilities.
JICA India Office Web: http://www.jica.go.jp/india/english/
JICA India Brochure: http://www.jica.go.jp/india/english/office/others/brochures.html