ADB clears $700 mn loan for infrastructure development

October 11, 2013

The ADB has approved $700 mn in loans to support govt's efforts to accelerate investment in infra which the country requires to ensure economic growth.
The ADB has approved $700 mn in loans to support govt’s efforts to accelerate investment in infra which the country requires to ensure economic growth.
NEW DELHI: The Asian Development Bank(ADB) has approved USD 700 million in loans to support the Indian government’s efforts to accelerate investment in infrastructure which the country requires to ensure strong economic growth.

“Poor infrastructure is one of the biggest drags on growth and development in India and there is a large investment funding gap of about USD 113 billion during the 12th Five-Year Plan for 2012-2017,” ADB said in a statement.

This assistance to India’s Infrastructure Finance Company Ltd (IIFCL) will allow it to lead the market evolution for infrastructure financing and will spur greater involvement from the private sector, said Cheolsu Kim, Lead Finance Specialist in ADB’s South Asia Department.

The government estimates that USD 1 trillion is needed in infrastructure investment to achieve economic growth of 8.4 per cent under its current five-year development plan, and expects nearly half of that to be financed by the private sector.

However, banks which have been the key source of infrastructure finance, are increasingly unable to provide funds as they are fast approaching exposure limits to key infrastructure companies, the Manila-based multi-lateral funding agency said.

ADB’s funds – provided through two loans under a multi tranche financing facility – will be used to provide direct loans for project developers and to replace bank loans, freeing up banks to provide credit in other greenfield projects, it added.

Currently, 31 road, railway, airport, urban infrastructure and energy projects, including in renewable energy, are in the pipeline to receive support from ADB.

Established in 2006, IIFCL is wholly owned by the government and its borrowing programme is fully backed by a government guarantee.


ADB grants $300 million for road project in India

August 17, 2013


The Asian Development Bank (ADB) has signed an agreement with the Government of India to provide a financing package of $300 million to fund a road development project in the state of Bihar.


The country intends to use the funds for Bihar State Highways II Project, which will upgrade 254 kilometers of severely deteriorated highway in northern and southern Bihar. The project will widen existing sections of four highways to two lanes, build and maintain bridges, and strengthen pavement. This should optimize access to the state highway network for beneficiaries living in remote villages.

The project will also use a $1 million from the allotted funds to prepare a 20-year road master plan for Bihar state. The project will also focus on improving the road design that will help address future flooding. To offset carbon emissions, the project will plant 10 trees for every individual tree cut for road widening. Solar panels will be used at construction sites to sequester carbon and reduce carbon emissions.

Stated for completion in October 2017, the estimated outlay of the Bihar State Highways II Project is $375 million. The remaining funding for the project will be provided by the government of India.



ADB to fund major highway project linking India’s North-East and Myanmar

June 20, 2013


The Asian Development Bank (ADB) is set to provide financing for a major highway project that will link India’s North-East (NE) region to Myanmar.

This latest project comes at the time when India’s commerce minister Anand Sharma set a bilateral trade target of $3bn by 2015 in his recent visit to Myanmar.

In addition, India is planning to launch a bus service from Moreh to Myanmar’s Mandalay, along with an integrated check-post in Moreh in order to facilitate the transportation of goods and services at the borders of the two countries.


 {“The planned highway, which is in accordance with

India’s Look-East policy,will connect

Agartala, Silchar, Imphal and Moreh with Myanmar.” }


Officials from ADB have recently visited Manipur for a technical survey and presented their preliminary aid memo to the Indian road ministry, which is examining the appropriate alignment and several other technical aspects before okaying the project.

A Road Ministry official was quoted by The Indian Economic Times as saying that the ADB is interested in financing four-lane highways, which has to be in line with traffic conditions in these regions.

According to experts, the proposed highway project is vital for India, as well as for other countries, such as Japan that are seeking to restrict China’s dominance over lesser-developed countries in South-East Asia.

India offered help to Myanmar in upgrading its 160km-long Tamu-Kalewa-Kalemyo road as well as in constructing the Kaladan multi-modal transit transport project, among other developments.

India’s Look East policy, initiated in 1991, represents the country’s efforts to develop extensive economic and strategic relations with South-East Asian countries in order to strengthen its position as a regional power and a counterweight to the strategic influence of China.

ADB may reduce lending for Indian Projects

May 20, 2013


 The Asian Development Bank (ADB) on Thursday hinted it might have to lower its lending programme to developing countries including India, saying its investments are not yielding adequate returns.The Manila-based multilateral lender had extended USD 2.4 billion loan to India across sectors such as transport, energy, commerce, industry, trade and finance in 2012. India is the biggest borrower of ADB.

“We have no solid base of capital to continue to lend at higher levels than before. But of course there are challenges to keep this level of lending. We have now entered a level of lending of USD 10 billion compared to USD 5 or USD 6 billion before. But can we keep this level of lending? That itself is a challenge….

“Because our income from investments of surplus resources, which is mostly lend to European countries, that return on investment is smaller than expected because of lower interest rates. So we hope to solve this issue of maintaining a sustainable lending level. We are working on this issue,” ADB president Takehiko Nakao said here.

Addressing the first press conference after taking over as ADB chief last month, Mr. Nakao said in India there are many projects, including the Delhi Mumbai Industrial Corridor, highways and rail projects which the ADB would be interested in promoting.

Mr. Nakao said participation of private sector was necessary to promote infrastructure in emerging economies as the capacity of lending of the multilateral lender is “limited.”

He said while over the 10 year period, the infrastructure financing needs for Asian countries would be USD 8 trillion, whereas the bank’s capacity of lending is USD 10 billion.

“We have to continue to mobilise resources for infrastructure financing through good taxation and mobillise savings of people to investment in infrastructure,” he said.

He noted that it was only through infrastructure development that poverty could be eradicated. Co-financing with the private sector and attracting offshore money would act as a catalyst in promoting infrastructure finance,” he said.

Answering questions on the growth potential of Asian economies, Mr. Nakao said Asian growth has been more robust than expected after the global economic crisis in 2008.

“It is because of domestic and indigenous demand that India, China and other emerging market economies in Asia have enjoyed stronger growth and I think it will continue,” he said adding Advanced Economies would continue to have slower growth for now but Asia will have stronger growth led by strong consumption demand.

To a query on ADB’s strategy after the establishment of the proposed BRICS Bank, Mr. Nakao said: “We can support the BRICS Bank if necessary… We don’t have to change our business model because of BRICS Bank.”

The BRICS Bank is seen as an institution complementing the World Bank or the ADB and addressing the infrastructure funding requirements of the member countries — Brazil, Russia, India, China and South Africa.

ADB is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth. Established in 1966, it has 67 members. In 2012, ADB’s assistance totalled USD 21.6 billion, including co-financing of USD 8.3 billion.