IIFC arm okays $270-m loan for Tata, ADAG projects

London-based IIFC (UK), the newly-formed foreign arm of India Infrastructure Finance Company (IIFC), has sanctioned $270-million loans to two infrastructure projects. It has extended a $200-million loan to Tata Power’s 4,000-mw Mundra ultra mega power project and about $70 million to Anil Dhirubhai Ambani Group’s Mumbai metro rail project. These are the first two projects to avail loans from IIFC, an official familiar with the transaction told ET. IIFC chairman and managing director SS Kohli confirmed that two loans have been sanctioned and requests for nine more are being processed. He declined to give names of the companies and interest rates . “Tata’s arm Gujarat Power will avail nearly half of the sanctioned loan as it has managed other sources of funding as well,” another person close to the development said on condition of anonymity. The company has said in its website that the first unit of the Rs 17,000 crore-power project is expected to be commissioned by 2011. “IIFC has also sanctioned about $60-70 million to a consortium of Reliance Energy and Mumbai Metropolitan Region Development Authority that is building a metro rail in Mumbai,” he said. The rail network connecting Versova, Andheri and Ghatkopar will cut short the time of travel between Mumbai’s western and eastern suburbs from 70 minutes to 21 minutes. The Rs 2,356-crore project had earlier secured Rs 650 crore from the Centre and the Maharashtra government to bridge a shortfall in its financing. IIFC was set up in 2008 to fund infrastructure projects by leveraging the country’s foreign exchange reserve. It is mandated to fund only for import of capital goods associated with core sector projects. Mr Kohli said the infrastructure lender is borrowing $250 million from the Reserve Bank of India as the first tranche of the $5 billion that the central bank had promised. The government announced last week it would allow IIFC to raise from the market Rs 30,000 crore through tax-free bonds after the lender exhausted the Rs 10,000-crore limit. IIFCL was allowed to raise the sum in 2008-09. “The National Highway Authority of India is expected to sanction projects with a cost of Rs 1,25,000 crore in the next two years. Several port projects are also in the pipeline. We expect a robust credit flow to all these projects with the money raised from the market. We would raise the first tranche of the tax-free bonds by the middle of this week,” Mr Kohli told