World Bank to provide $3 bn for roads

The World Bank has agreed to provide a $3-billion loan for developing national highways.

The assistance will be utilised for converting 6,372 km of one-lane highways into two-lane, of the total of 19,702-km single-lane highways.

“They (World Bank) have, for the first time, informed me that they will be willing to fund the viability gap and also 50 per cent of our annuity projects,” Road Transport Minister Kamal Nath told the Indian media here after concluding his week-long tour to the US yesterday.

Nath also announced the construction of 18,000 kms of expressways in the country.

“We are going to set up an expressway division in the next fortnight and I propose bringing in legislation for Expressway Authority of India,” he said.

“Roads in India are not merely a matter of connectivity but also an important component of inclusive growth,” he said, adding that the total project costs for 2009-2010 was estimated at $20 billion.

Both debt-equity and pension funds were being invited to participate in this programme, he said. The share of private sector investment in this would be about $12 billion.

Over the next few years, of the total projected investment of $80 billion, the private sector investment is estimated to be $45 billion and this makes the road project the largest public-private partnership in the world, Nath said.

To get a diverse set of investors on board, the minister has travelled to Singapore, London, Zurich and NYC to listen to their concerns.

“While India remains an attractive investment destination, we have to see that the model of our projects are also investment-attractive,” he said.

ICICI Bank CEO Chanda Kocchar noted that the $20-billion road programme offered an attractive opportunity for both equity and debt investors.

“The roads asset is an asset-class that provides a very steady and stable return to investors,” she said.

“What we have been doing working with the government in the last few months is to try and look at the facilitative factors that can make all the road projects even more economically viable,” she added.

Ajit Gulabchand of Hindustan Construction Company said the road project will create two kind of investors — those who are solely developers and those who want a steady annuity from it by investing in a toll.