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ADB signs $190 million loan for Rajasthan road upgrade

November 2019
The Asian Development Bank (ADB) and the Government of India have signed a $190 million loan agreement to upgrade 754 km of state highways and major district roads (MDRs) to two lane or intermediate-lane standards that will benefit about 26 million people in 14 districts of Rajasthan.

The signatories to the Tranche 2 agreement for the Rajasthan State Highway Investment Programme were Sameer Kumar Khare, Additional Secretary (Fund Bank and ADB), Department of Economic Affairs in the Ministry of Finance, on behalf of the Government of India, and Kenichi Yokoyama, Country Director of ADB’s India Resident Mission, who signed for ADB. The Tranche 1 loan of $ 220 million under the programme, signed in July 2017, upgraded about 1,000 km of state roads.

According to a PIB release, after signing the loan agreement, Khare said, “The Tranche 2 roads pass through mostly rural areas of Rajasthan that lack reliable connectivity and will help improve access to health, education facilities and markets, leading to increased job opportunities.” Laying emphasis on promoting operational efficiencies and innovations, Yokohama said, “The project will encourage participation of the private sector through the hybrid annuity mode (HAM) and EPC contracts.”

The ADB value-addition will finance part of the construction costs for annuity-based PPP concessions and EPC contracts, and ensure good governance during project implementation, particularly with regard to procurement and safeguards. The annuity-based PPP model attracts private-sector financing to address capital investment requirements, where a proportion of initial capital expenditure is paid during construction while the balance is serviced by annuity payments during the operation and maintenance phase. Toll collection rights will remain with the state public works department to bring sustainability in operation and maintenance of the project.

For the benefit of commuters and pedestrians, particularly women and children, the project includes the construction of over 200 bus stops, 70 km of hard shoulder, and 2 km of raised sidewalk on project roads.

Established in 1966, ADB made commitments of new loans and grants amounting to $21.5 billion in 2018.