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ADB Approves US$500 Million Emergency Aid To Rebuild Earthquake-Hit Gujarat

Extended Mission Established in Gandhinagar

New Delhi, India (26 March 2001) - Earthquake-devastated Gujarat in India will be rebuilt with the help of a US$500 million emergency loan approved today by the Asian Development Bank (ADB). In addition, ADB has established an extended office at Gandhinagar, close to the earthquake-affected areas, to ensure prompt and efficient implementation of the rehabilitation project.

The loan will support the state government's efforts to reconstruct and restore essential infrastructure, especially in the districts of Kachchh, Jamnagar, Surendranagar and Rajkot. About 40 percent of the loan will be for housing needs and the balance for urban and rural infrastructure, restoring power supply and livelihood rehabilitation.

"ADB's quick action in reply to the state government's appeal for assistance reaffirms our flexibility and responsiveness to the country's changing economic and social conditions," says Yoshihiro Iwasaki, the ADB Programs Director who had led a team of high-level officials from headquarters in Manila to Gujarat within days of the catastrophe to discuss assistance with the state government. In addition, ADB had also dispatched a team of experts to assist the state government.

The new ADB office, an extension of its New Delhi-based Resident Mission, will provide better coordination in implementing the project. "The extended office will strengthen our client orientation as the project focuses on early restoration of economic and social activity in the affected areas," says Frank Polman, ADB's Resident Representative in India.

On 26 January, an earthquake measuring 7.7 on the Richter scale by the U.S. Geological Survey wreaked destruction across the industrialized state of Gujarat. Thousands were killed and thousands more were left homeless. The total cost of the Gujarat Earthquake Rehabilitation and Reconstruction Project is US$625 million, of which ADB will finance 80 per cent and the state government the remainder. The ADB loan will come from its ordinary capital resources and is repayable over 30 years, including a seven-year grace period. The interest rate will be ADB's pool-based variable lending rate for US dollar loans.

Read the Gujarat Earthquake Recovery Program Assessment Report and related news release.

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