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Rediff.com  » Business » ADB may fund road grants

ADB may fund road grants

June 16, 2003 12:56 IST

The government's new Rs 48,000 crore (Rs 480 billion) road upgradation project has received a shot in the arm with the Asian Development Bank evincing interest in funding the capital grant component of the project cost to be provided to private operators.

The capital grant component to be bid by the build-operate-transfer operators has been capped at 40 per cent.

The government requires around Rs 14,000 crore (Rs 140 billion) to meet an average of around 30 per cent capital grant sought by operators for taking up these projects.

"The ADB has evinced interest in funding the capital grant portion of the funds. The details are still being worked out," a government official said.

Finance Minister Jaswant Singh had announced the launch of 48 new build-operate-transfer road upgradation projects covering 10,000 km in the Budget for 2003-04.

These were among the infrastructure projects, including port, airport, and railways, to be funded through a Rs 2,000 crore (Rs 20 billion) annual revenue stream under the viability funding scheme announced in the Budget.

Since it is still unclear how much money will be dedicated to the road projects annually out of the Rs 2,000 crore, funding from multilaterals like the ADB and the World Bank would help the projects take off soon, government officials said.

The first lot of 23 contracts covering 3,003 km of national highways are scheduled to be tendered this fiscal.

These projects, being executed by the ministry of road transport and highways, will be taken up for four-laning over the next 4-5 years.

These projects are over and above the 13,000 km of national highways being upgraded under the Rs 58,000 crore ( Rs 580 billion) National Highways Development Project.

The ministry of road transport is already in the process of forming a three-tier setup in the ministry for executing the projects.

Private operators have already submitted expressions of interest  for 23 projects on offer this fiscal.

The government had, however, decided to stagger the payment of the 40 per cent capital grant for upcoming build-operate-transfer road projects over 10 years, against the current practice of giving it upfront to private operators.

Operators taking up projects will, therefore, not qualify for upfront capital grant payout. The payout has been spread over a 10-year period, even as the funding cap for bidding for the grant component for these projects has been retained at 40 per cent.

Anil Sasi in New Delhi