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ADB inks loans agreements worth $574 mn for various projects in India

As part of the loan agreements, ADB will provide $300 million to support lending by India Infrastructure Finance Company (IIFCL).

November 16, 2018 / 10:17 PM IST

The Asian Development Bank (ADB) on November 16 signed three loan agreements with the government to provide debt of $574 million for on-lending, electricity transmission and water supply infrastructure projects. ADB and the government signed three separate loan agreements for $300 million, $169 million and $105 million.

As part of the loan agreements, ADB will provide $300 million to support lending by India Infrastructure Finance Company (IIFCL).

"ADB funding is expected to fund at least 13 sub-projects through IIFCL, involving roads and renewable power generation, under the last tranche," ADB Country Director for India Resident Mission Kenichi Yokoyama said in the release.

The project will enhance availability of long-term finance for PPP projects, improve operations capacity of IIFCL and expand the portfolio of infrastructure financing instruments available to IIFCL, said Finance Ministry Additional Secretary Sameer Kumar Khare, who signed the agreement on behalf of the government.

"The loan is expected to compliment government's infrastructure building efforts," Khare said.

ADB said that this loan of $300 million is expected to help catalyze the financial closing of $2.4 billion investments.

The project supports the renewed effort of the government of India in accelerating infrastructure growth through increased private sector investment. The project is relevant and responsive to the constraints to bank-based infrastructure financing, fiscal space creation, and repercussions on GDP growth, ADB said.

Among others, the $169 million loan is the first tranche of up to $500 million loan that will be used to develop climate-resilient water supply, sewerage and drainage infrastructure in at least 10 cities in Tamil Nadu.

The state has faced recurring droughts and erratic monsoons in the recent past resulting in severe water scarcity and urban flooding. ADB's support will help address these complex urban challenges through innovative and climate-resilient investment and deeper institutional support, Khare said.

"The ADB programme forms part of its support to the state's Vision Tamil Nadu 2023 to provide universal access to water and sanitation and to develop world-class cities in high-performing industrial corridors," Yokoyama said.

The $105 million is the third tranche of the $350 million multi-tranche financing facility for multi-tranche financing facility (MFF) for Himachal Pradesh Clean Energy Transmission Investment Program approved by the ADB Board in September 2011.

It is aimed at developing and expanding the transmission network to evacuate clean and renewable power generated from the state's hydropower sources to load centres within and outside the state, ADB said.

It is also supporting the institutional capacity development of the state transmission utility, Himachal Pradesh Power Transmission Corporation Limited (HPPTCL), as the executing agency for this project.

"This particular loan will help Himachal Pradesh to benefit electricity consumers in the state and throughout northern India, by increasing the transmission system capacity for inflow of the hydropower generated in the state into India's national grid," Khare said.

first published: Nov 16, 2018 10:03 pm