The Asian Development Bank (ADB) signed a $220 million loan agreement with India on Monday for improving connectivity, transport efficiency and safety on State Highways of Rajasthan, a Finance Ministry statement said.

The signatories to the loan agreement were Raj Kumar, Joint Secretary (Multilateral Institutions), Department of Economic Affairs in the Ministry of Finance, who signed on behalf of the Government of India, and Kenichi Yokoyama, Country Director of ADB’s India Resident Mission, who signed for ADB.

The project agreement was signed by Mr. S. L. Sharma, Chief Engineer and Additional Secretary, Public Works Department, the Government of Rajasthan.

According to the government, the loan is the first tranche of the $500 million Rajasthan State Highways Investment Program, approved by ADB Board in May this year that will improve about 2,000 km of state highways and major district roads to two lane or intermediate lane standards to meet road safety requirements.

The laon will have a 25-year term, including a grace period of 8 years, and carry an annual interest rate determined in accordance with ADB’s London interbank offered rate-based (LIBOR) lending facility.

Raj Kumar, Joint Secretary (MI), DEA, public private M/o Finance said that the project will help improve State Highways and major district roads in Rajasthan. It will also enhance the capacity of the State public works department in the areas of road asset management, road safety and project management.

After signing the loan Agreement, Kenichi Yokoyama, Country Director of ADB’s India Resident Mission said that one of the focus areas of the program is to attract private sector financing through government capacity public-private partnership (PPP) development. ADB will finance part of the construction costs for the annuity-based PPP concessions and engineering procurement construction (EPC) contracts, enhance the stability of contract regime, and ensure good governance during project implementation.

The total cost of the project is $1.415 billion, with the government contributing $465 million and $450 million coming from the private sector and other concessionaries.
Last week, the ADB announced their new $10-billion country strategy for India, with the focus on supporting low-income states and the development of economic corridors. The multilateral lender will assist with $5 billion over a five-year period for the needs of poorer states including Uttar Pradesh, Bihar, Jharkhand, Odisha and Chhattisgarh.

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