W-11031/6/2016-Water-1I Government of India Ministry of Drinking Water & Sanitation *** 4th Floor, Paryavaran Bhawan CGO Complex, Lodhi Road New Delhi-110003 Date:fOFebruary, 2016 To Secretary / Principal Secretary In Charge of Rural Water Supply (All States and UTs) Subject: - Furnishing the project proposal for funding from Asian Infrastructure Investment Bank (AIIB). Sir, The undersigned is directed to refer to the meeting held by Ministry of Finance, Department of Economic Affairs on 28.01.2016 to shortlist the areas for posing the projects to Asian Infrastructure Investment Sank (AilS). Minutes of the meeting is enclosed for perusal. It is hereby requested that Project Proposal for AIIB assistance may be submitted in the enclosed proforma (Annex. I); and as per the procedure outlined in Annex- II. End: as above Yours Sincerely p,~ (Rajesh Kumar) Director (water) Copy to Director (MI), Ministry of Finance, Department of Economic Affairs North Block, New Delhi-11 0001
ToSecretary / Principal SecretaryIn Charge of Rural Water Supply(All States and UTs)
Subject: - Furnishing the project proposal for funding from Asian InfrastructureInvestment Bank (AIIB).
Sir,
The undersigned is directed to refer to the meeting held by Ministry of Finance,Department of Economic Affairs on 28.01.2016 to shortlist the areas for posing theprojects to Asian Infrastructure Investment Sank (AilS). Minutes of the meeting isenclosed for perusal.
It is hereby requested that Project Proposal for AIIB assistance may besubmitted in the enclosed proforma (Annex. I); and as per the procedure outlined inAnnex- II.
End: as above
Yours Sincerely
p,~(Rajesh Kumar)Director (water)
Copy toDirector (MI), Ministry of Finance,Department of Economic AffairsNorth Block, New Delhi-11 0001
12/3/201S-FB.VIGovernment of IndiaMinistry of Finance
Department of Economic Affairs[MI Division]
3rd February, 2016
OFFICE MEMORANDUM
Sub: Minutes of the meeting chaired bv Additional Sec_retarv ___{_J;jll on28.1.2.016 to _deliberate upon the projects for Asian InfrastructureInvestment Bank (AlIB ) funding - reg.
The undersigned is directed to enclose minutes of the meeting taken by
Shri Dinesh Sharma, Additional Secretary (EA) on January 28, 2016 to
deliberate upon the projects for AIIN funding for information and action asappropriate.
Encl: a.a.
To
1. The Additional Secretary (Shri Jalaj Shrivastava), Department ofAgriculture Cooperation and Farmers Welfare, Krishi Bhawan, New Delhi- 110 001
2. The Joint Secretary & Financial Adviser (Ms. Gargi Kaul), Ministry of CivilAViation, Safdar Jung Airport, Rajiv Gandhi Bhawan, New Delhi.
3. The Joint Secretary (Shri Niraj Verma), Ministry of Road Transport &Highways, Transport Bhawan, New Delhi - 110 001.
4. The Economic Adviser (Shri J.C. Sharma), Ministry of New & RenewableEnergy, Block No.14, CGO Complex, Lodhi Road, New Delhi - 110003.
5. The Executive Director (Shri M.K. Srivastava), Ministry of Railways,Railway Board, Rail Bhawan, New Delhi - 110 001.
6. The Agriculture Commissioner (Dr. S.K. Malhotra), Department ofAgriculture Cooperation and Farmers Welfare, Krishi Bhawan, New Delhi- 110 001
7. The Senior Joint Commissioner (Shri J.R. Bora), Ministry 'of WaterResources, River Development & Ganga Rejuvenation, Shram ShaktiBhawan, New Delhi - 110 DOL
~ Director (Shri Rajesh Kumar), Ministry of Drinking Water &Sanitation, 'C' Wing, Paryavaran Bhawan, eGO Complex, Lodhi Road,New Delhi - 110 003.
9. The Director (Shri Vishal Kapoor), Ministry of Power, Shram ShaktiBhawan, New Delhi - 110 001.
10.The Deputy Secretary (Shri S. Rakesh Kumar), Ministry RuralDevelopmemt, R.No.367-A, Krish Bhawan, New DElhi - 110 001
Minutes of the meeting taken by the Addl. Secretary (EA) On28th January, 2016to deliberate upon the projects for AIIB funding
Date: 28/01/2016Time: 10:30 AM
A meeting was taken by the Shri Dinesh Sharma, Additional Secretary (EA)on 28.01.2016 to discuss projects for posing to the Asian Infrastructure andInvestment Bank (AllB). The list of participants is annexed.
2. Explaining the context of the meeting, AS(EA) stated that the AIIB is one ofthe two new Development Banks established recently. This Bank was formallyopened for business w.e.f. 16.1.2016. The Bank will focus on financing of projectsfor development of infrastructure and other productive assets in Asian countries,including energy, transportation, telecommunications, rural infrastructure andagriculture development, water supply and sanitation, environmental protection,urban development and logistics. While the initiative to set up this Bank came fromChina, India is the second largest shareholder of the Bank. Besides China, India isthe only country to have its own exclusive constituency on the Executive Board ofthe Bank. One of the Vice Presidents of the Bank is also from India. The President ofthe Bank had called on the Hon'ble Prime Minister on 11.1.2016, during which thePrime Minister has specifically directed that project proposals in the following ttireeareas may be posed to the AIIB on priority:
AS(EA) clarified that while the above three areas are our immediate priority, soundproposals in any infrastructure sector are welcome. Considering that India's demandfor infrastructure is insatiable, it is imperative that we take full advantage of this newfinancing window, and quickly develop a shelf of bankable projects keeping in viewthe priorities identified by the Hon'ble PM. This meeting has been convened in thisbackdrop.
3. AS(EA) stated that the pricing and cost of AIIB loan, although not yet finalized,are expected to be in line with the terms of the World Bank! ADS loans. The tenureof the loan wHl be between 15 to 20 years, and therefore infrastructure projectsrequiring long term finance only may be considered for AilS funding. It was'underlined that project approval by the AilS is expected to be faster and simpler, ascompared to other MOBs. Based on the requirements indicated by the AIIB, a formathas been devised for submission of proposals for AIIB funding. The format hasalready been circulated by tile DEA, and copies were again provided in the meeting.It was clarified that the AilS may not insist on providing DPRs at the initial stage.However, it is advisable to keep the DPRs ready, as they will be required at the
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project preparation stage in any case. Overall, the project screening and preparationare expected to be faster for AilS funded projects compared to existinq MOBs suchas the World Bank and the ADS. The AIIB is also open to co-financing of projectsalong with existing MOBs.
4. Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)
4.1. AS, Department of Agriculture, Cooperation & Farmers Welfare (OoAC&FW)stated that the PMKSY involves multiple stakeholders, as the PMKSY has beenformulated through amalgamation of several ongoing schemes such as AcceleratedIrrigation Benefit Programme (AIBP) of the Ministry of Water Resources, RiverDevelopment & Ganga Rejuvenation (MoWRRD&GR), Integrated WatershedManagement Programme (IWMP) of Department of Land Resources (DoLR) and theOn Farm Water Management (OFWM) of Department of Agriculture and Cooperation(DAC). Therefore, the NITI Aayog is currently preparing a detailed road map forimplementation of the initiative. Once the roadmap by NITI Aayog is laid out, which isexpected by end February 2016, DoAC&FW will be in a better position to come upwith specific proposal for AIIB support.
4.2. JS(MI) stated that schemes are ultimately implemented by the StateGovernments, and, therefore, it is advisable that the projects are owned up by them:He suggested that the DoAC&FW should take a lead in motivating the States tocome up with projects under PMKSY for MOB finances. For instance, States cancome up with projects on the line of successful models such as GGRC of Gujarat,which has successfully undertaken minor irrigation of 200,000 hectares of land onannual basis. AS, DoAC&FW informed that this model has been discussed in thebrainstorming sessions organized by the NITI Aayog.
4.3. Commissioner (Agriculture) pointed out that there is a huge financing need forbuilding additional cold storage facilities to reduce post-harvest losses. As againstthe requirement of 35.2 million tons of cold storage capacity, only 31 million tons ofcapacity is available. To bridge this gap about 600 additional cold storages arerequired. This is one area for which DoAC&FW would require MOB finance.
4.4. AS(EA) stated that since this meeting has been convened in the specificcontext of the PM's direction to pose projects to AIIB under the PMKSY, DoAC&FWmay work with lnterested State Governments, and come up with good bankableprojects under PMKSY for AIIB financing in a time bound manner, preferably within amonth. Since schemes are ultimately implemented by the State Governments, theOEA would prefer that the projects are also owned by the State Governments, withthe DoAC&FW playing the role of a facilitator. JS (MI) stated that a workshop maybe organised with the help of MOBs to guide the States on accessing externalassistance under PMKSY.
'vb .......'-II V
4.5. JS(MI) also stated that a recent study by the ADB has found that efficiency ofmedium and large irrigation projects in India is only about 40% as against theinternational average of 60%. Therefore, there is a clear potential to increase ourirrigation output substantially even without undertaking any new project. MaWR hasan important role to guide the States in this area. He suggested that the MaWR mayorganize a workshop with the State governments, where World Bank/ADS canadvise the States to come up with potential projects to enhance efficiency of theexisting irrigation schemes with MOB support.
5. Rural Housing
5.1. OS, MoRO stated that the guidelines of Pradhan Mantri Gramodaya Yojanaare being finalized, which envisages construction of 2.95 crore houses over a periodof seven years. The sharing pattern between the central and State Government is60:40. The estimated financing requirement at the central level is RS.1.83 lakhcrores. A huge financing gap of about Rs.1.13 lakh crores exists at central level,which the MoRD proposes to bridge with AIIB and other MOB assistance.
5.2. JS(MI) reiterated that it is advisable that the proposals are owned by the StateGovernments rather than the Government of India. For instance, the GOI canprovide their 60% share out of the budgetary resources; and State Governments cantake MOB loan to meet up to 70% of the State share (i.e. 70% of 40% of projectcost). This would ensure State ownership and better project outcomes. Thisapproach has also been recommended by the MoHUPA for the urban component ofthe PMAY.
5.3. AS(EA) stated that whoever takes the loan, it is imperative that the ownershipof the project is clear and definite. The DEA may further discuss this issue bilaterallywith MoRD to quickly firm up a proposal for AIIB financing.
6. Railways
Executive Director, Ministry of Railways stated that financing has been tied up formost of the approved projects. However, two projects viz. East West Corridor andEast Coast Corridor are under consideration in the Ministry. Once a final decision istaken and if MOB financing is required, these projects will be considered for AIIBfinancing.
7. Other sectors
7.1. JS& FA, MaCA stated that an amount of RS.1500 crore is required to replacethe aging fleet of Pawan Hans Helicopters Ltd. While the Screening Committee inthe DEA had approved a proposal to develop a helihub in Guwahati for NDBfinancing, it was also decided not to consider projects relating to procurement and
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'------{)n
acquisition of aircrafts. However, she contended that for much of the north eastregion, helicopter is an alternative to road transport. Besides it is all the moreimportant because paramilitary forces are also dependent on helicopters services.Since the Pawan Hans Limited does not have a balance sheet to raise loan from themarket, she requested for a reconsideration of the earlier decision by the DEA.
AS (EA) enquired whether the helicopters will be manufactured in India, andthe project could fit into the "make in India" initiative. JS & FA, MoCA informed thatthe HAL does not have the capacity to produce such copters, and they have to beimported. AS (EA) stated that the priority is obviously to get the AIIB financing for theinfrastructure projects. However, in the event of adequate number of bankableinfrastructure projects not forthcoming, the requirement of the MoCA to procuretransport helicopters with AIIB financing may be examined by the MI Division in theDEA.
7.2. JS, MoRTH informed that a proposal for Bharatmala initiative to improveconnectivity in the border areas, including coastal boundary, is at an advanced stageof approval. This initiative consists of several projects. He enquired whether part offunding requirements could be met out of the AIIB financing, and whether financingby more than one MOB is possible. It was clarified that MaRTH can submit specificprojects for AilS funding. Besides, the AIIB is open to co-financing a particularproject. JS(MI) also stated that since the ADB has a regional funding window, it isadvisable to pose such projects in Eastern and North Eastern States for AoBfinancing, and projects in other parts of the country for AIIB/NOB financing.
7.3. OS, Mlo Shipping informed that as part of the Sagarmala initiative, a shelf ofprojects has been identified. While several of these projects are at an advancedstage for JICA and ADB funding, projects for development of 3 deep sea ports mayrequire MOB financing. JS (MI) advised that the port projects in the east coast maybe proposed for ADB funding to take advantage of the additional regional window,and AIIB funding may be sought for projects on the West Coast.
7.4. Director (MI) informed that the Screening Committee in its meeting held on21.11.2015 had approved five proposals for AIIB financing, out of which threeproposals are to be piloted by the MoNRE. The DEA is still awaiting the DPR andother relevant documents from the MoNRE. The representative of the MoNRE statedthat the OPRs in respect of the two projects are ready and will be forwarded to theDEA within a week. However, there is no viable proposal for the third project, i.e,"Creation of Inter-State Transmission Infrastructure for power evacuation from SolarParks in Energy-Renewable Energy", and it may not be possible to take it forward.
I ace ....VI u
7.5. Representatives of DoOWS stated that they have a few proposals for MOBfinancing, but would require clarity on the terms and conditions of the AIIB loan, inparticular on whether on-going projects, or projects receiving assistance fromanother MOB, can be posed for AIIB financing. It was clarified that while MOBassisted projects require that the procurements are compliant with the guidelines ofthe financing MOB, the AIIB is open to co-financing of projects with anotherdevelopment Bank.
8. To sum up, the following decision were taken:
1) DoAC&FW wiU submit bankable projects under the PMKSY for AIIB financingwithin a month in consultations with the State Governments.
Action: DoAC&FW
2) DEA will bilaterally discuss the possibility of AIIB financing of projects for ruralhousing with Ministry of Rural Development.
Action: OENMoRD
3) Ministry of Water Resource will consider organizing a workshop with the StateGovernments, where World Bank/ADB would guide the States on irrigationprojects that can be supported by the MOBs.
Action: MoWR
4) DEA will examine the request of Ministry of Civil Aviation for procurement ofHelicopter by Pawan Hans Limited with AIIB funding if adequate number ofbankable projects in the infrastructure sector is not forthcoming.
Action: DEA
5) Ministry of Shipping may submit project proposals for development of DeepSea Ports on the West Cost for AIIB funding. Similar projects on the East coastmay be considered for AOB financing.
Action: Ministry of Shipping
6) Ministry of Road Transport and Highways may submit specific projectproposals along the West Cost for All B financing under the BharatmalaInitiative. Projects along the East Coast or in North Eastern States may beconsidered for ADB financing.
Action: MoRTH
The meeting ended with a vote of thanks to the Chair.
*****
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(1
List of participants in the meeting chaired by AS(EA), to deliberate upon the projects forAIIB fundin_9held on 26th jO..;1uary, 2016 in R.No.131-A, North Block, New Delhi.Name of the Participant Designation MinistrylDeptt.1
[1 _ ~ProjectN:::at for S_ubmlssion of propos"Hor iUS funding---- - ---=112 -1 ii-rojectLo_cat;o~;;'rl(jscope(i"eferabIYW~tha~a~)1__ _ ... __ I"'3." . 'I'roject Objective ~ j! 4 tsect~ral strategyiPlan,if any ----- -1- ._ ..-- ..- -. -------. i
.. j .---- ----.-- .. ----.- . -- -.-- - I' ---.. ------ .r: Principal components of the projecti ~) , I
I I
16.-- .. -_._--' - .----.-----~.~-.._. .... --_ ... _. -- ..._---Total estimated project cost and preliminaryfinancing plan, including the borrower's ownfunding, proposed AIIB financing, and othermultilateral/bilateral development partners, if any
7 component-wise cost structure of the project
8. The current or likely setup of the executing agency(EA) and implementing agency (IA)
9. Preliminary assessment of environmental andsocial impact, in particular, land acquisition andinvoluntary resettlement
10. Current status of project preparation, expectedimplementation schedule with milestones of output
11. Financial outlook, including revenue source forfuture repayment
12. Need for know-how and special skills
13 Finance Plus/ innovative Components
14 Previous phases implemented with MOBassistance
15 Statutory clearances required, in particular-
environment and land acquisition related.
16 Expected impediments, and remedial actionsplanned.
**~**
Annex.11
Procedure for submission of prol?osals for AIIB assistance:
[AJ Proposals from State Government (State Sector project proposals):
i) All project proposals will be submitted to the DEA, through the Central lineMinistry, with their concurrence! comments. For North-Eastern States, theproject proposals are required to be submitted through M!o DONER. who in{urn will consult the Central line Ministry, and MEA, MHA etc if required.
ii) Debt sustainability certificate from the Finance Department of the StateGovernment concerned, as per Deptt. of Expenditure OM l'lJo.3(37)!FRU/201!)dated 22.7.2015 (copy enclosed), may be provided.
iii) Tile minimum counterpart funding is 30% of the project size, in respect of StateSector project proposals, as per DEA's Circular NoA!1!2011-FB.11 dated1.12.2011 (copy enclosed).
iv) Maximum external funding is capped at US$ 500 million at present.
v) All project proposals are to be accompanied by a SWOT analysis for perusal ofthe Screening Committee in the DEA.
[B] Proposals from Central Government (Central Sector project proposals):
i) All project proposals will be submitted to the DEA through the NITI Aayog, withtheir concurrence.
ii} The minimum counterpart funding is 50% of the project size, in respect ofCentral Sector project proposals, as per DEA's Circular NoA!1/2011-FB.1Idated 1.12.2011 (copy enclosed).
iii) All project proposals are to be accompanied by a SWOT analysis for perusal ofthe Screening Committee in the DEA.
[C] Proposals from Central PSUs:
i) All project proposals will be submitted to the DEA, through the administrativeCentral Ministry and the NITI Aayog, with their concurrence.
ii) The minimum counterpart funding is 50% of the project size as per DEA'sCircular NoA!1!2011-FB.11 dated 1.12.2011 (copy enclosed).
\
iii) All project proposals are to be accompanied by a SWOT analysis for perusal ofthe Screening Committee.
iv) It may be noted that Rule 247 of GFR, 2005, as amended from time to timestipulate as under:
(a) All borrowings from tile multilateral agencies by Central Public SectorUndertakings would be direct (without Government of India'sintermediation) on the terms as agreed mutually between the borrower andthe lender and approved by the Government of India. However, wheresuch terms involve grant of Government of India Guarantee, prior approvalof the Budqel Division of tho Ministry of Finance may be obtained
(b) The borrovving should relate to approved Projects.
(c) Wherever guarantee is to be given by Government of India, the borrowershall enter into an agreement with the Government of India for thepayment of guarantee fee on the principal amount of the loan drawn andloan outstanding from time to time.
(d) The borrower shall bear the exchange risk and get the funds directly onterms and conditions prescribed by the lending agency."
A policy paper on Government Guarantees titled "Government Guaranteepolicy' issued by the Budget Division, DEA on 22.9.2010 is available on thewebsite of . Ministry . of Finance(URL:http://finmin.nic.in/the ministry/dept eco affairs/budgeUgovern guarantee policy.pdD for ready reference. .
v) The above provisions are to be followed in' case of multilateral fundingrequested by Central PSUs.
