IDFs should mobilise resources from insurance, pension: FM

First tripartite pact by India Infradebt Fund with NHAI was signed for the road project promoted by Jaypee group

As ICICI Bank-led India Infradebt Fund signed a Rs 50-crore tripartite loan agreement for a road project promoted by the Jaypee Group on Friday, Finance Minister P Chidambaram said infrastructure debt funds (IDFs) should try to mobilise resources from insurance and pension sectors as these funds are available for the long term.

India Infradebt Fund is promoted by ICICI Bank (31 per cent), Bank of Baroda (30 per cent), Citibank (29 per cent) and Life Insurance Corporation of India (10 per cent). The tripartite agreement was signed with the National Highways Authority of India.

“The agreement has been created in the road sector and paves the way for many more such projects to have access funding through tripartite agreement,” said ICICI Bank Managing Director and CEO Chanda Kochhar.

Himalayan Expressway Ltd, a subsidiary of the Jaypee Group, is undertaking the construction of the Zirakpur-Parwanoo Highway connecting Punjab, Haryana and Himachal Pradesh on build, operate and transfer (BOT) basis. The length of the highway would be 28.69 km.

The project involves strengthening of the existing carriageway. It is in operational phase, the finance ministry said in a statement.

IDFs can finance projects of up to $2 billion.

Kochhar said there are about 100 road projects in India that are ready and would require about Rs 50,000 crore of combined bank funding. This agreement can pave the way for all such projects to access this kind of funding. She said similar pacts can be made for other infrastructure sectors such as ports and airports, besides public-private projects.

Concerned over poor infrastructure, the government had in 2011-12 allowed formation of IDFs to step up investment in the infrastructure sector, which requires $1 trillion in the 12th Plan.

Of the total proposed investment, 50 per cent is expected to come from the private sector and the debt contribution is expected to be around $350 billion.