India: MFF - Second India Infrastructure Project Financing Facility (IIPFF-II) - PFR2

Sovereign Project | 41036-033

Summary

The Second India Infrastructure Project Financing Facility (IIPFF II or the Facility), a Multitranche Financing Facility (MFF), involves a loan of $700 million to India Infrastructure Finance Company Limited (IIFCL or the Borrower) which directly supports the Government's infrastructure development agenda through enhancing the availability of the much needed long-term funds for infrastructure financing. The Facility is an integral part of ADB's sector strategy and compliments ADB's parallel initiatives in public-private partnerships (PPPs), contractual savings, and capital markets-all of which contribute to creating an enabling environment for long-term financing for infrastructure development.

Latest Project Documents


Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Project Name MFF - Second India Infrastructure Project Financing Facility (IIPFF-II) - PFR2
Project Number 41036-033
Country India
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2717-IND: MFF - Second India Infrastructure Project Financing Facility (IIPFF II)(Subproject 2)
Ordinary capital resources US$ 250.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector

Finance - Infrastructure finance and investment funds

Gender Equity and Mainstreaming
Description

The Second India Infrastructure Project Financing Facility (IIPFF II or the Facility), a Multitranche Financing Facility (MFF), involves a loan of $700 million to India Infrastructure Finance Company Limited (IIFCL or the Borrower) which directly supports the Government's infrastructure development agenda through enhancing the availability of the much needed long-term funds for infrastructure financing. The Facility is an integral part of ADB's sector strategy and compliments ADB's parallel initiatives in public-private partnerships (PPPs), contractual savings, and capital markets-all of which contribute to creating an enabling environment for long-term financing for infrastructure development.

A Framework Financing Agreement (FFA) was signed between Asian Development Bank (ADB), IIFCL, and the Government of India (the Government or the Guarantor) on 6 October 2009 for IIPFF II. On 17 November 2009, ADB's Board of Directors approved the MFF. Subsequently, the loan and guarantee agreements for the first tranche (Tranche I) amounting to $210 million were signed on 22 December 2009 by authorized signatories. The loan for Tranche I became effective as of 17 March 2010. The Facility Administration Memorandum was signed on 17 March 2010 between ADB and IIFCL. In February 2010, an environmental and social management unit (ESMU) was established which was a condition precedent for the loan effectiveness of Tranche 1.

IIFCL requested ADB to approve the second tranche of IIPFF II. In this context, the IIFCL submitted the second periodic financing request (PFR2) dated (17 November 2010 [to be updated]) amounting to $250 million. This report has been prepared to provide management with the project team's assessment of the MFF implementation and recommendations for funding under Tranche II.

Project Rationale and Linkage to Country/Regional Strategy

Reliable and high quality infrastructure is a critical determinant of productivity to support sustained economic growth and poverty reduction. While high quality infrastructure is essential to harness growth impulses in the economy, insufficient infrastructure capacity of India results in lower productivity, higher transport and logistic costs, and reduces competitiveness. With higher growth target and a rising population, even maintaining current levels of infrastructure will require staggering an enormous increase in investments.

Based on the targeted growth rate and identified deficit, required infrastructure investment is estimated at approximately $514 billion. Accordingly, the goal of the Government of India (the Government) is to increase infrastructure investment from 4.5% to 9% of gross domestic product during the 11th Five-Year Plan (FYP) period, FY 2007-FY2011. Investments deficits of this scale cannot be bridged by public financing that is already limited by fiscal constraints.

Recognizing the role of the private sector in infrastructure development, the Government has placed private sector participation (PSP) and PPP at the core of its infrastructure development strategy. In line with this approach, infrastructure development is being fostered by initiatives to create an enabling environment for PPP through (i) addressing policy and regulatory gaps in several infrastructure subsectors, (ii) enhancing the capacity of public institutions and officials to manage PPP processes, and (iii) increasing the volume of financing and availability of risk mitigation instruments to manage and allocate risks in line with the new business model.

Impact Improved overall availability and reliability of physical infrastructure
Project Outcome
Description of Outcome Increased private sector participation in infrastructure projects, particularly through PPP
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

tbd

1. Long-term funding for IIFCL to provide long-term financing to subprojects developed through PPPs

2. Financing of 11 infrastructure subprojects as provided in the PFR2

3. Improved institutional capacity of IIFCL in areas of (i) governance framework, including risk management systems; and (ii) implementation of updated ESSF

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Safeguard Categories
Environment FI
Involuntary Resettlement FI
Indigenous Peoples FI
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design tbd
During Project Implementation IIFCL will continue to be the executing agency of IIPFF II. Policy direction and strategic oversight will be provided by IIFCL's Board of Directors. The project management unit (PMU), established under IIPFF I, will continue to monitor day-to-day implementation of the Facility and also improve the capacity of IIFCL in areas of identification, screening, selection, and monitoring of all subprojects. The ESMU will be responsible for compliance with state and national policies and the ESSF.
Business Opportunities
Consulting Services

The Borrower shall cause qualified enterprises to (i) adopt, to the extent possible, internationally-competitive bidding procedures when the amount of the investment is unusually large and economy and efficiency can be gained by following such procedures; and (ii) ensure that the goods and works to be financed by subloans shall be purchased at a reasonable price, account also being taken of relevant factors such as time of delivery, efficiency and reliability of goods, and their suitability for the qualified project and, in the case of consulting services, of their quality and the competence of the parties rendering them.

For build-operate-transfer projects and their variants, if the qualified enterprise or engineering, procurement, and construction contractor is selected through competitive bidding among international entities in accordance with procedures acceptable to ADB, such qualified enterprise or contractor may apply its own procedures for procurement provided that such procurement is for goods and works, and consulting services supplied from, or produced in, ADB member countries. To this end, the qualified enterprise shall ensure that the amount of procurement of goods, works, and consulting services from member countries of ADB is at least equal to the size of the subloan for the qualified project.

Procurement IIFCL will undertake the same obligations with respect to procurement as under Tranche I which will be in accordance with ADB's Procurement Guidelines (2010, as amended from time to time), and will also comply with the operations manual adopted by the Board of IIFCL on 14 November 2008.
Responsible ADB Officer Cheolsu Kim
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
India Infrastructure Finance Company Limited8th Floor, Hindustan Times Building
Kasturba Gandhi Marg
New Delhi, India 110001
Timetable
Concept Clearance -
Fact Finding -
MRM 22 Nov 2010
Approval 07 Dec 2010
Last Review Mission -
Last PDS Update 10 Dec 2010

Loan 2717-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
07 Dec 2010 17 Mar 2011 08 Apr 2011 31 Dec 2014 - 23 Oct 2012
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 250.00 Cumulative Contract Awards
ADB 250.00 07 Dec 2010 250.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 07 Dec 2010 250.00 0.00 100%

Evaluation Documents

See also: Independent Evaluation

No documents found.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.