Adb, Gujarat In Talks For $600m Loan
An Asian Development Bank (ADB) delegation is in the country to negotiate the final leg of the $600 million power sector loan to the Gujarat government for the revamp of the state electricity board.
Government officials said the team was in Ahmedabad negotiating with the state government. The main loan is to be preceded by a technical assistance loan to make exploratory efforts for the recast of the Gujarat State Electricity Board (GSEB).
The bank is slated to pick up equity in the newly created Gujarat Industries Power Company, the first power generating entity outside the GSEB.
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Earlier, Orissa had undertaken a complete revamp of the SEB with the help of a World Bank loan. Thereafter, several other states including Rajasthan and Haryana had evinced their keenness to pursue similar loan initiatives with the World Bank.
Simultaneously, the state government is in negotiations with the ADB for another loan of for $150-200 million for infrastructure development which is to be routed through the state-owned Gujarat Industrial Investment Corporation (GIIC).
With the state government proposing its stake in the unit to minority levels, GIIC will be eligible to raise the funds through the private sector window of ADB. This loan will be for part financing private sector projects in the infrastructure.
Another loan package on the anvil after the announcement of the new roads policy in December last year is a $350 million loan from the World Bank. At present, the state is availing of the technical assistance package from the World Bank for laying down the blueprint for reforms in the roads sector.
Gujarat had earlier kicked off the first state level loan programme for $250 million from ADB. The quick disbursement loan had been struck as a tripartite agreement among the Centre, ADB and the Gujarat government, since under the Indian constitution, states cannot directly access external funds.
The loan had three critical aspects. The first entailed several measures to ensure substantial fiscal correction in the next three years. The second part referred to the reform of the public sector and included complete withdrawal of the government from some sectors and also carry out strategic sale of majority stakes to a private promoter.
The third leg of the structural reforms initiative is pertaining to the creation of an ideal infrastructure climate in the state for catalysing private sector investment in ports, roads and power.