To boost urban service delivery in the towns of Odisha in a manner that is both financially and environmentally sustainable, the German Government-owned development bank, KfW on Thursday, 2 August, signed a loan agreement worth 50 million euros (approximately 350 crore rupees) and a financing agreement for project development and capacity building providing a grant of 2.5 million euros (approximately 15 crore rupees) with the Government of India in Bhubaneswar. 

The agreement was signed by Prabodh Saxena, Joint Secretary, Department of Economic Affairs of India’s Ministry of Finance and Oskar von Maltzan, Director KfW Office, India, in the presence of the Chief Minister of Odisha Naveen Patnaik, German Consul General in Kolkata Rainer Schmiedchen, Bijaya Kumar Patnaik, Chief Secretary to the Government of Odisha and Bernd Dunnzlaff, Head of Economic Cooperation and Development at the German Embassy in New Delhi.

To manage the growing urbanisation of the state in a planned manner, the Government of Odisha is creating a dedicated institutional framework for urban financing that will support municipal infrastructure development by combining financing with technical assistance and capacity building. With assistance from Germany’s KfW, the Government of Odisha has established the 'Odisha Urban Infrastructure Development Fund (OUIDF)' as a fully owned trust. It is under the ambit of Odisha’s Housing and Urban Development Department (HUDD) as the nodal agency for urban finance in the state. 

OUIDF has been set up with the goal of developing sustainable financial structures that will effectively link external, non-budgetary sources of finance and capital markets with the financing needs of Urban Local Bodies (ULBs). OUIDF will engage an Asset Management Company (AMC) through a competitive bidding process, which will provide technical support for the implementation of the OUIDF’s projects and manage its day-to-day business. This structure will combine government oversight with professional efficiency to improve implementation of urban projects.

Enlarge image Oskar von Maltzan (L) and Prabodh Saxena (R) sign the agreement in the presence of in the presence of Chief Minister of Odisha Naveen Patnaik and Rainer Schmiedchen, German Consul General in Kolkata (© KfW) The reduced interest loan provided by KfW on behalf of the German Government to the OUIDF through the Government of India and the Government of Odisha will refinance infrastructure projects with positive environmental and social impacts in the urban areas of Odisha. The technical assistance grant will be used to provide project development and capacity building support to the ULBs and other implementing agencies in the state. This will enable the ULBs to develop well-structured bankable projects and innovative solutions for the delivery of urban services. 

Eligible projects can include improvements in water supply, sewerage and sanitation, solid waste management, drainage, slum development and rehabilitation, climate adaptation measures and other environmentally friendly civic amenities in the urban and industrial areas of Odisha.

The agreements signed today form part of the Financial Cooperation between India and Germany. It also symbolizes the enduring partnership and long standing commitment of India and Germany. Today’s ceremony took place under the fifteen-month collaborative celebration titled “Germany and India 2011-2012: Infinite Opportunities”. The thematic focus of this celebration is “Stadträume – CitySpaces,” which will share the experiences of both countries in managing the opportunities and challenges posed by rapid urbanisation in the quest to build more inclusive cities. 

About KfW: German Financial Cooperation is channeled through KfW, which acts as implementing agency on behalf of the German Government. KfW Development Bank is part of the KfW Bankengruppe, one of the largest financial institutions in Germany.

Germany and KfW are longstanding partners of India. Since the 1950s, more than nine billion euro has been sanctioned by the German government through KfW, mainly in the fields of energy, financial sector development, health, and protection of the environment and natural resources. Urban infrastructure is one of the core sectors in KfW’s global portfolio. The main objective of the German government is to work together with the Indian government in facilitating inclusive growth, reducing poverty and meeting the Millennium Development Goals.