$130 Million ADB Loan to Improve Rail Infrastructure along Key Routes

NEW DELHI, INDIA – The Asian Development Bank (ADB) and the Government of India today signed a $130 million loan to help India improve rail services along some of its busiest and most critical freight and passenger transport routes.

The second tranche loan is part of the $500 million Railway Sector Investment Program approved by ADB in 2011, and will finance track components for 840 km of additional tracks along existing railway lines.

“The improvements in rail infrastructure will help deliver more energy efficient, safe, reliable, and environmentally friendly rail services along key high density routes. This will result in direct and indirect economic opportunities for about 21 million people in program areas who will benefit from faster travel times, lower costs and improved links to markets, production centers and social service facilities” said M. Teresa Kho, Country Director of ADB’s India Resident Mission, who signed the loan agreement, on behalf of ADB.

Nilaya Mitash, Joint Secretary (Multilateral Institutions), Department of Economic Affairs at the Ministry of Finance, signed for the Government of India. Satish Agnihotri, Chairman and Managing Director, signed the project agreement on behalf of the Rail Vikas Nigam Limited.

“The investment program targets busy freight and passenger routes in the states of Chhattisgarh, Odisha, Maharashtra, Karnataka and Andhra Pradesh, including the critical ‘Golden Quadrilateral’ corridor that connects Chennai with Mumbai. Many of the lines traverse through impoverished rural areas and carry large number of passengers and huge quantities of minerals and other economically important freight,” said Mr. Mitash.

The loan will be funded from ADB’s ordinary capital resources. It has a 25-year term, with a grace period of 5 years, and annual interest set in accordance with ADB’s LIBOR-based lending facility. The Government of India will provide counterpart finance of over $97.2 million to cover the balance of the costs of the second tranche which is estimated at over $227.2 million. The Ministry of Railways carries out the program which is due for completion by December 2018.