Big funding boost to B'luru suburban rail; Germany's KfW signs pact to lend Rs 4.5K crore

Bengaluru: Germany's KfW Development Bank will lend €500 million (about Rs 4,500 crore) to build the Bengaluru suburban railway in the first foreign loan agreement for the much-delayed project. 

Spanning four corridors or lines, the 148-km project has been struggling to meet the October 2025 deadline set by Prime Minister Narendra Modi due to various reasons, including the absence of funding, 60 per cent of which is to be provided by foreign agencies.

Railway Infrastructure Development Company (Karnataka), or K-RIDE, which is building the project, signed the loan agreement with KfW representatives in New Delhi on Friday. Senior officials from the Ministry of Finance's Department of Economic Affairs as well as the government of Karnataka were present on the occasion, according to a statement. 

Besides the €500 million loan, KfW will also provide a grant of €4.5 million (Rs 40 crore) for the project. K-RIDE will use all of this money to invite and execute tenders for corridors 1 and 3 as well as systems works, the statement said. 

A well-placed source in K-RIDE said systems works would cover traction, air-conditioning, signalling and track-linking. 

K-RIDE has prepared the tender documents for the civil work of the 41.4-km corridor 1, which will link Majestic with Devanahalli with a branch line to the airport. 

"The tender documents are ready and will be sent to KfW by December-end for formal approval. We plan to invite the tenders in January," the source said. 

KfW will release the funds against bills raised by K-RIDE. "This is the standard practice," the source said. 

The remaining €300 million will be provided by the European Investment Bank, and the loan agreement will be signed by March 2024, the source said. 

Civil work tenders for Corridor 3 (35.52 km, Kengeri-Whitefield) will be invited in two months. Work on systems tenders are also going on and their tenders will be called shortly, the source said. 

Meanwhile, the groundwork has gathered pace on Corridor 2 (25.57 km, Benniganahalli-Chikkabanavara) while K-RIDE is preparing to award the contract for Corridor 4 (46.88 km, Heelalige-Rajanukunte) in the coming days, the source added. 

GoK also provides Rs 2,608 cr in subordinate debt towards state GST, land, IDC and R&R. Centre provides Rs 763 cr in subordinate debt to cover central GST and basic customs duty. 

The Centre sanctioned Rs 50 crore in 2022-23 & Rs 1,350 crore in 2023-24.The government of Karnataka sanctioned Rs 1,000 crore in 2023-24.