The executing agency for the Second India Infrastructure Project Financing Facility (IIPFF II), the India Infrastructure Finance Company Limited (IIFCL), requested ADB to approve the Tranche III (Periodic Financing Request [PFR]3) of IIPFF II for $240 million to finance 7 indicative new subprojects in addition to the disbursement balance left for 5 existing subprojects approved under Tranches I and II. The total cost of the 7 subprojects is estimated at Rs140.18 billion (or $2.92 billion), inclusive of taxes, duties, and interest and other charges on the loan during construction, against which IIFCL sanctioned Rs15.2 billion (or $316.27 million). The PFR3 is expected to catalyze 12 times of funding resources from the market.
The requested loan of $240 million will be from ADB's ordinary capital resources under ADB's LIBOR-based lending facility with a 0.15% commitment charge and a 25-year term including grace period of 5 years, and such other terms agreed in the FFA and under the loan agreement. The last date on which any disbursement request under this tranche is expected to be made on 14 December 2014.
IIFCL's project management unit (PMU), established under the IIPFF I, will continue to monitor day-to-day implementation of Tranche III including the identification, screening, selection, and monitoring of all subprojects, including compliance with state and national policies and the environmental and social safeguard framework. The indicative 7 subprojects under the proposed PFR3 were selected based on commercial and technical viability in compliance with relevant national and ADB norms. The tranche's loan proceeds will be disbursed in accordance with ADB's Loan Disbursement Handbook (2007, as amended from time to time). IIFCL requested retroactive financing for the PFR3. Except as otherwise agreed with ADB, it is proposed that the total eligible expenditure under retroactive financing will not exceed an amount equivalent to 20% of the individual loan and must have been incurred not more than 12 months before signing of the related legal agreements.
|Project Rationale and Linkage to Country/Regional Strategy
IIPFF II is designed to support the Government's infrastructure development agenda. IIPFF II will provide funds at commercial terms with more than 20-year maturities for infrastructure PPP subprojects. Funds at such terms are currently not available in the domestic market. The global crisis has further constrained the availability of long-term funds in international capital markets. ADB's support to IIFCL will also encourage long-term investors to participate in IIFCL's market offerings.
Support for the IIPFF II is an integral part of ADB's sector strategy, including the India country partnership strategy 2009-2012 and ADB's Strategy 2020. It complements ADB's parallel initiatives in contractual savings, corporate bonds, PPP, and infrastructure development, all of which contribute to creating an enabling environment for infrastructure development in India. The IIPFF II is closely aligned with the development goal and targets set forth in the Government's 11th FYP.