Asian Development Bank (ADB) has approved a $631-million loan to the proposed Vishakhapatnam-Chennai industrial corridor (VCIC), the first coastal one in the country.
On Tuesday, the Manila-Based regional development financing bank approved the loan which will help develop infrastructural amenities and industrial capabilities in and around major cities in Andhra Pradesh such as Vishakhapatnam, Kakinada and the proposed state Capital of Amravati.
While the VCIC is aimed at promoting export-oriented manufacturing in the region, it also aims to leverage port infrastructure to evacuate these exports. One of these, the Krishnapatnam port, has the potential to match the entire container cargo handling capacity of India’s west coast.
“The port currently handles less than 0.1 million TEU (Twenty foot Equivalent Unit) of cargo annually. Capacity can be raised to more than 20 million TEU, more than Kandla, Mundhra and JNPT port combined,” said ADB’s Principal Urban Development Specialist, South Asia, Manoj Sharma.
JNPT port in Mumbai, the biggest container handling port in India, processes around 55 per cent of the country’s containerised cargo or around 4 million TEUs.
The VCIC is part of the larger East Coast Economic Corridor (ECEC), extending more than 2,500 km from Kolkata in West Bengal and Tuticorin in Tamil Nadu. The government is banking on the ECEC to create industries, jobs and give a fillip to connectivity along the east coast.
The ADB loan comprises a $500-million debt for financing infrastructure like roads, power generation and drinking water, among others. It also includes a $125-million loan to help policy interventions by the government for improving ease of business and creating a corridor management body. The loan would be disbursed as soon as the Andhra Pradesh government finalises awarding the contracts to various developers for creating infrastructure within the project area.
The first tranche of $245 million is expected to reach the government by the first quarter of 2017. The second tranche is expected to be approved by ADB in 2018. ADB also has an option to increase the loan.
“We realise $500 million is not enough to improve urban development, transport, power and other infrastructure. We will continue to support the government if there is good absorption capacity,” added Sharma.
The Andhra Pradesh government will also be giving $215 million for VCIC.
Recently, a number of states had complained of delays by the Centre in releasing ADB funds after these are disbursed by the multilateral body. The Mamata Banerjee-led West Bengal government, for example, was up in arms about a critical ADB loan which had not reached it 11 months after the expected date.