ADB, India sign $ 490 mn loan for upgradation of MP roads

at 1:43 pm
Representative picture.

New Delhi (NVI): The Asian Development Bank (ADB) and the Union government today signed a $490 million loan for public-private partnership (PPP) project to upgrade about 1,600 km of state highways and major district roads (MDRs) in Madhya Pradesh.

Besides, another $286 million investment will be mobilised through private sector participation under the PPP modality.

The project will upgrade 750 km of state highways and 850 km of MDRs to two-lane and all-weather standards with road safety features, an official statement said.

It will also develop an e-maintenance system, which can record defects or required maintenance, along with a training programme to develop capacity on contract implementation and project finance in Madhya Pradesh Road Development Corporation.

Since 2002, ADB has provided the state government with five loans to develop its road network, improving about 7,300 km of roads or about 11 per cent of the total network.

Speaking on the occasion, Additional Secretary (Fund Bank and ADB) Sameer Kumar Khare said that the state highways and major district roads provide a crucial link between rural roads and national highways.

The upgradation of these roads under the project will improve rural and peri-urban connectivity in the state and improve access to markets and better services, he added.

Country Director of ADB’s India Resident Mission, Kenichi Yokoyama said that the project continues ADB’s engagement with the state’s road sector since 2002. This will open a new partnership by introducing PPP through the hybrid-annuity model, thereby leveraging government financing and improving the sustainability of capital investments.

Notably, under the hybrid-annuity model, the government will release 60 per cent of the total project cost during construction, to be paid to the concessionaire in tranches linked to completion milestones. The remaining 40 per cent is arranged by the concessionaire in the form of equity and commercial debt. Once the project is completed, the government will repay the concessionaire’s financial investment over 10 years.