World Bank provides $400 million loan for Namami Gange Programme

$400 million loan agreement has been signed between Government of India and World Bank on 7th July, 2020 for rejuvenating River Ganga.

Loan will fund second National Ganga River Basin project which is part of Namami Gange programme. 

Topics Covered:

• Who is providing loan for Namami Gange Programme?
• Loan details
• Loan repayment details
• Purpose of Loan

Who is providing loan for Namami Gange Programme?

The loan is provided by the lending arm of World Bank i.e., International Bank for Reconstruction and Development (IBRD).

This is the first-ever IBRD Guarantee for wastewater treatment and the first IBRD Guarantee in the water sector in India.

Loan details:

The $400 million operation comprises: 

• Loan of $381 million and 

• A proposed guarantee of upto $19 million to backstop the government’s payment obligations for three Hybrid-Annuity-Model Public Private Partnership (HAM-PPP) investments on the Ganga’s tributaries. 

Loan repayment details:

$381 million variable spread loan has a maturity of 18.5 years including a grace period of 5 years. The $19 million Guarantee Expiry Date will be 18 years from the Guarantee Effectiveness Date.

Maturity: 18.5 years

Grace Period: 5 years

Purpose of Loan

Loan will fund second National Ganga River Basin project which is part of Namami Gange programme. 

The Second National Ganga River Basin Project will help stem pollution in the iconic river and strengthen the management of the river basin which is home to more than 500 million people. 

1) The Project will help expand the coverage of sewage treatment infrastructure to more towns in the Ganga Basin, and focus on making sure that these assets are operated and maintained efficiently in the long term.

2) The Project will also help NMCG develop state-of-the-art tools to help manage the river basin more effectively.

3) The continuity provided by the Second National Ganga River Basin Project (SNGRBP) will consolidate the momentum achieved under the first World Bank project, and help National Mission for Clean Ganga (NMCG) introduce further innovations, and benchmark its initiatives against global best practices in river rejuvenation

4) The SNGRBP will finance sewage networks and treatment plants in select urban areas to help control pollution discharges. 

These infrastructure investments and the jobs they will generate will also help India’s economic recovery from the Covid-19 (Coronavirus) crisis.

5) To ensure that these infrastructure assets function effectively and are well maintained, the Project will build on the innovative Hybrid Annuity Model (HAM) of public private partnership introduced under the ongoing NGRBP, and which has become the solution of choice for sewage treatment investments in the Ganga Basin.  

Under this model, the government pays a private operator 40 percent of the capital cost to build a sewage treatment plant during the construction period; the remaining 60 percent is paid as performance-linked payments over 15 years to ensure that the operator runs and maintains the plant efficiently.