Devalued rupee increases Nagpur Metro cost by 14%

Nagpur: Devaluation of rupee has sharply increased the cost of Nagpur Metro project as foreign loans have become costlier. According to the detailed project report (DPR), the cost of foreign loan including interest was Rs3,825 crore. This has now increased to Rs5,270 crore, a hike of about 38%. MahaMetro will have to pay Rs1,445 crore extra in rupee terms to foreign lenders KfW (Germany) and AFD (France).

However, due to replacement of various taxes by goods and services tax (GST), the project cost has reduced by about Rs200 crore. Taking the two factors into account, the project cost is about Rs9,925 crore instead of Rs8,680 crore, an increase of over 14%.

Sources in MahaMetro said that due to devaluation of rupee the foreign loan component had become costlier even when the loan agreement was signed.

“We had signed a loan agreement with KfW for 500 million Euros on April 1, 2016. At that time the loan in rupee terms was Rs3,777 crore as the exchange rate was Rs75.54. A loan of 130 million Euros was signed with AFD on December 15, 2016. At that time the exchange rate was Rs70.76. The total cost of these loan in rupees was Rs4,697 crores. The foreign loan component had already increased by about 28%,” said an official.

As on Wednesday, the exchange rate was Rs83.65 and the 630 million Euro loan is now Rs5,270 crore in rupee terms. “Rupee has devalued a lot between 2014 and 2018. The exchange rate when the DPR was prepared was Rs60.71,” he further said.

According to the official, introduction of goods and services tax (GST) has reduced the project cost. “The DPR cost of the two corridors was calculated assuming that customs duty would be 22.85%, excise duty 12.36%, sales tax 6.25%, works tax at 6.25% and value added tax 12.5%. The total tax on north-south corridor was Rs420 crore while the figure for east-west corridor was Rs443 crore. Except customs duty, all the taxes have been replaced by GST at 12%. This has reduced the project cost by over Rs200 crore,” he said.


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