Germany’s KfW Ipex-Bank has granted a €23.4mn loan guaranteed by Euler Hermes for the expansion of a metro line in India. It marks the first time for an export credit agency to back such a loan for this sector in the country, claims the financier.

Indian developer IL&FS Transportation Networks (ITNL) will use the funds in the Rapid Metro South extension project in northern India, which has seen Siemens supply rolling stock, depot workshop equipment, and the signalling and power systems.

“In India, soft loans by development finance institutions dominate in this segment,” says Luis-Miguel Gutierrez, chief representative of KfW Ipex-Bank in India. “With our financing we have introduced a completely new financing model in the Indian market.”

KfW Ipex-Bank is serving as Hermes’ agent. IL&FS Financial Services (IFIN) acted as the advisor-cum-arranger to ITNL for the transaction.

The bank is also providing a fixed-rate loan based on the CIRR (Commercial Interest Reference Rate) with a tenor of 13 years with the aim of supporting German exports in this project and others, a spokesperson from KfW tells GTR. The bank declined to reveal the loan amount.

The elevated railway in Gurugram (formerly Gurgaon), Haryana and New Delhi, is the first privately built and operated metro in the country. The seven-kilometre extension connects Gurugram – India’s third-highest per-capita income region with a population of 50 million – to the metro system of Delhi, with an interchange station at Sikandarpur. The new metro section has been operating since March 2017. The funds are provided under a reimbursement payment, the KfW spokesperson says, hence the time delay. Completion of the extension project is expected by the end of this year, the spokesperson adds. A further extension is currently under consideration.

Ramesh Bawa, managing director and CEO of IL&FS Financial Services says: “The Gurgaon Rapid Metro project has exemplified how public-private partnerships also have an ability to attract international funding.”