On December 20, 2019, Asian Development Bank (ADB),an international development finance institution has inked a $490 million loan agreement with Government of India (GoI) for upgrading about 1,600 km of Madhya Pradesh(MP) state highways (750km) & major district roads- MDRs (850km) from single-lane to two-lane widths in the state.
This project will be a public-private partnership (PPP) through the hybrid-annuity model (HAM),for this, an additional $286 million investment will be mobilized by the state.
Key Points:
i.In addition to developing an e-maintenance system, which can record defects/ required maintenance,the project will also develop training program needed to promote capacity on contract implementation and project finance in the Madhya Pradesh Road Development Corporation.
ii.This fund will improve road conditions , rural and peri-urban connectivity,safety &raise living standards by enabling better access to markets and better services.
iii.The agreement has been signed by Shri Sameer Kumar Khare, Additional Secretary (Fund Bank and ADB), Department of Economic Affairs, Ministry of Finance, and Mr Kenichi Yokoyama, Country Director of ADB’s India Resident Mission.
iv.Background:ADB has granted 5 loans since 2002 to the MP state government to develop its road network, improving about 7,300km of roads.
HAM: It is a mix of engineering, procurement, construction, and build-operate-transfer. As part of this, the central government will be entitled to release 60% of the total cost of the project during the construction phase while the remaining 40% project cost will be arranged by the concessionaire in the form of equity and commercial debt.
However, the government will repay the concessionaire’s financial investment and operation and maintenance over 10 years once the project is completed.
About ADB:
Motto– Fighting Poverty in Asia and the Pacific
Formation– 19 December 1966
Headquarters– Manila, Philippines
Membership– 68 countries
President– Masatsugu Asakawa (effective from 17th January 2020)
About Madhya Pradesh:
Capital– Bhopal
Governor– Lalji Tandon
Chief minister– Kamal Nath
