The Hindu : Business : ADB to extend $500 m loans

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Saturday, Dec 15, 2007
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ADB to extend $500 m loans

Special Correspondent

To promote PPPs in infrastructure

NEW DELHI: The Asian Development Bank (ADB) will provide India with loans up to $500 million to promote public-private partnerships (PPPs) between the Government and the private sector to ramp up investments in infrastructure.

According to an ADB statement, the funds would be provided to the State-owned India Infrastructure Finance Co. Ltd. (IIFCL) in multiple tranches over the next four years. The funds, it is estimated, would help catalyse private sector investments in infrastructure worth about $3.5 billion.

Although the Government has been the main provider of infrastructure in India, public funding alone, however, would not be able to meet the estimated $475 billion investment that is required between now and 2012 for roads, railways, seaports, airports, electricity transmission lines and other infrastructure facilities.

“A serious lack of infrastructure is seen as India’s ‘Achilles’ heel’ and it is estimated to cost the country three to four per cent in terms of gross domestic product every year,” said Cheolsu Kim, Principal Financial Sector Specialist at ADB. “India needs to double its current level of investment in infrastructure and to increase and mainstream public-private partnerships.”

Financing plan

IIFCL is to provide funds at commercial terms with over 20-year maturity for infrastructure projects, which is not currently being provided by the market. The company has a $6 billion financing plan for fiscal years 2007-11. Half of that is to come from the Indian domestic market, including insurance, pension funds and the National Savings Scheme (NSS) while the other half is to be mopped up from the international capital markets as also bilateral and multilateral sources, including ADB.

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