Union Cabinet nod for IWAI bond issue

The Union Cabinet gave its nod to Inland Waterways Authority of India (IWAI) to raise Rs.660 crore in bonds for extra budgetary resources (EBRs) in 2017-18.
The proceeds from the bonds will be utilised by IWAI for development and maintenance of National Waterways (NWs) under National Waterways Act, 2016. Moreover, the funds received will be used exclusively for capital expenditure to improve infrastructure funding.

Modalities

The principal and interest in respect of the EBRs will be financed by the Union Government by making suitable budgetary provisions in the demand of the Union Ministry of Shipping. The interest payment on the bonds will be on semi-annual basis and the principal on maturity. The whole exercise would be undertaken by IWAI through appointment of lead managers and coordination with SEBI.

Background

Gross budgetary support from the Union Government and external financial support for funding development and maintenance of 106 new National Waterways under National Waterway Act, 2016, is grossly inadequate. So far, the World Bank has sanctioned a loan of $ 375 million (around Rs 2,421 crore) for Jal Marg Vikas Project (JMVP) along with other sources. But still there is funding gap which may be bridged by raising bonds.

About Inland Waterways Authority of India (IWAI)

IWAI is the statutory body in charge of the waterways in India. Its headquarters is located in Noida, UP. Its main function is to build the necessary infrastructure in the inland waterways, surveying the economic feasibility of new projects and also carrying out administration and regulation.

Month: Current Affairs - July, 2017