ADB is helping India accelerate its rollout of infrastructure projects through public-private partnerships. The project will help state-owned India Infrastructure Finance Company Ltd. (IIFCL) support investments in a broad range of infrastructure projects by providing long-term financing on commercial terms with more than 20-year maturities, which are otherwise not available in the market.
|Project Name||MFF - Second India Infrastructure Project Financing Facility (IIPFF-II) - PFR2|
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Governance and capacity development
Private sector development
|Sector / Subsector||
Finance / Infrastructure finance and investment funds
|Gender Equity and Mainstreaming|
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|
|Description of Outcome||Increased private sector participation in infrastructure projects, particularly through PPP|
|Progress Toward Outcome|
|Description of Project Outputs||
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)|
|Summary of Environmental and Social Aspects|
|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.|
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||Kim, Cheolsu|
|Responsible ADB Department||South Asia Department|
|Responsible ADB Division||Public Management, Financial Sector and Trade Division, SARD|
India Infrastructure Finance Company Limited
10th Floor, Jeewan Prakash Building
25 Kasturba Gandhi Marg
New Delhi, India 110001
|Approval||07 Dec 2010|
|Last Review Mission||-|
|Last PDS Update||10 Dec 2010|
|Approval||Signing Date||Effectivity Date||Closing|
|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||0.00||0.00||0%|
|Cofinancing||0.00||07 Dec 2010||250.00||0.00||100%|
|Status of Covenants|
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.
|Title||Document Type||Document Date|
|Guarantee Agreement for Second India Infrastructure Project Financing Facility - Project 2 between India and Asian Development Bank dated 17 March 2011||Guarantee Agreements||Mar 2011|
|Loan Agreement for Second India Infrastructure Project Financing Facility - Project 2 between India Infrastructure Finance Company Limited and Asian Development Bank dated 17 March 2011||Loan Agreement (Ordinary Resources)||Mar 2011|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
Evaluation Documents See also: Independent Evaluation
None currently available.
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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.
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