The Asian Development Bank (ADB) signed three loan agreements with the government to provide debt of $574 million for on-lending, electricity transmission, and water supply infrastructure projects.
ADB and the government signed three separate loan agreements for USD 300 million, USD 169 million and USD 105 million.
As part of the loan agreements, ADB will provide USD 300 million to support lending by India Infrastructure Finance Company Ltd (IIFCL).
The project will enhance the availability of long-term finance for PPP projects, improve operations capacity of IIFCL and expand the portfolio of infrastructure financing instruments available to IIFCL, said Finance Ministry Additional Secretary Sameer Kumar Khare, who signed the agreement on behalf of the government.
ADB said that this loan of USD 300 million is expected to help catalyze the financial closing of USD 2.4 billion investments.
The project supports the renewed effort of the government of India in accelerating infrastructure growth through increased private sector investment. The project is relevant and responsive to the constraints to bank-based infrastructure financing, fiscal space creation, and repercussions on GDP growth, ADB said.
Among others, the USD 169 million loan is the first tranche of up to USD 500 million loans that will be used to develop climate-resilient water supply, sewerage and drainage infrastructure in at least 10 cities in Tamil Nadu.
The state has faced recurring droughts and erratic monsoons in the recent past resulting in severe water scarcity and urban flooding. ADB’s support will help address these complex urban challenges through innovative and climate-resilient investment and deeper institutional support, Khare said.
The USD 105 million is the third tranche of the USD 350 million multi-tranche financing facility for multi-tranche financing facility (MFF) for Himachal Pradesh Clean Energy Transmission Investment Program approved by the ADB Board in September 2011.
It is aimed at developing and expanding the transmission network to evacuate clean and renewable power generated from the state’s hydropower sources to load centers within and outside the state, ADB said.
It is also supporting the institutional capacity development of the state transmission utility, Himachal Pradesh Power Transmission Corporation Limited (HPPTCL), as the executing agency for this project.