ADB board okays $500 mn loan for climate resilient infra development in Tamil Nadu

Asian Development Bank (ADB) will provide a USD 500 million loan to build climate resilient infrastructure in several cities of Tamil Nadu, the multilateral funding agency said.

The Board of Directors of the Asian Development Bank (ADB) has approved financing of up to USD 500 million for a multi-tranche financing facility (MFF) that will develop climate-resilient water supply, sewerage, and drainage infrastructure in at least 10 cities in the Indian state of Tamil Nadu, ADB said in a statement.

"With almost half of the state population living in cities, Tamil Nadu is the most urbanised of India's large states," said ADB Senior Urban Development Specialist Ron Slangen.

Managing this rapid urbanization is essential for sustaining its economic growth and alleviating poverty. The state suffers from recurring droughts and erratic monsoons linked to climate change 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, Slangen said.

The ADB programme will provide direct assistance in these areas as part of its support to the state's Vision Tamil Nadu 2023 to provide universal access to water and sanitation and to develop world-class cities in high-performing industrial corridors.

The Manila-headquartered ADB said this funding will be in three tranches between now and March 2022.

It will develop climate-resilient sewerage collection and treatment and drainage systems in 10 cities, and install the country's first solar-powered sewage treatment plant on a pilot basis, ADB said.

The programme will introduce smart water management systems to reduce non-revenue water and strengthen operational efficiency, it said.

ADB said around 4 million people will benefit from piped water and sewerage connections and improved drainage.

The first tranche of the programme amounting to USD 169 million will target the cities of Chennai, Coimbatore, Rajapalayam, Tiruchirappalli, Tirunelveli, and Vellore.

A USD 2 million grant from the Asian Clean Energy Fund, established by the Government of Japan, will fund the solar energy pilot project.

The Union Government, Government of Tamil Nadu, Chennai Metropolitan Water Supply and Sewerage Board, and various urban local bodies will provide USD 766.4 million toward the total programme cost.

Also, an ADB technical assistance grant of USD 1 million will accompany the program to support capacity building.

The funding availability period is up to 30 June 2026.