New Delhi, Jul 31 (IANS): Japan is soon expected to finalise concessional financing for the $2.26-billion Line 3 of the mass rapid transit system in Mumbai on the lines of soft-funding the hugely-popular Metro in the national capital.

The Japan International Cooperation Agency (JICA) is in the final phases of deciding the funding for the third line of the Mumbai Metro multi-billion dollar project with a soft loan at an interest of around 1.4 percent per annum, a top Japanese official said.

"We have been requested by the Indian government to provide funding for Mumbai Metro's Line 3. The request is being reviewed positively by the Japanese authorities," said Yuichiro Sano, the top representative for the Japanese agency here.

"I am hopeful the Mumbai Metro will also be financed on the lines of Delhi Metro. Japan will also be keen to provide technical support," Sano told IANS in an interview.

The federal government's request to JICA is for the 20-km underground link of Mumbai Metro, referred as Line 3, which will run from Colaba in south Mumbai to Bandra in the northwest of the metropolis, often called the queen of the suburbs.

The foundation stone for the 63-km Phase One of Mumbai Metro was laid by Prime Minister Manmohan Singh in June 2006. Conceived then in three phases, the total project cost at that time was estimated at $8.03 billion.

Under Phase One, the 11-km Line 1 runs in the suburbs of Versova-Andheri-Ghatkopar and the 32-km Line 2 connects Charkop and Bandra with Mankhurd, both being developed by a consortium led by industrialist Anil Ambani's Reliance Group.

Both these are elevated lines under the public-private-partnership mode.

The two projects have a holding arm, Mumbai Metro One, in which Reliance Infrastructure holds 69-percent equity, the state-run Mumbai Metropolitan Region Development Authority has 26 percent, while the remaining is with French giant Veolia Transport.

"The third line is mostly underground. It requires a huge investment. Accordingly, it is not seen as a viable public-private partnership project. The cost for this 20-km phase is estimated at over Rs.10,000 crore," Yuichiro said.

"That's why the Indian government has aproached us for a soft loan."

As regards the rate of interest, the Japanese official said the standard rate for India is 1.4 percent. "I hope the new loan will also come at this rate with a repayment period of 30 years and a grace of 10 years."

Yuichiro said Japan may also make available two other options -- one, an interest rate of 0.80 percent, with repayment period of 20 years and grace period six years; and, two, a rate of 0.70 percent, with repayment period 15 years and grace period of five years.