India : Accelerating Infrastructure Investment Facility in India

Sovereign Project | 47083-001

Accelerating Infrastructure Investment Facility in India (AIIFI) is a $700 million multitranche financing facility to India Infrastructure Financing Company Limited (IIFCL). The project aims to facilitate private sector investment in infrastructure public-private partnerships (PPP). This is necessary as infrastructure supports economic growth and poverty reduction. The impact of the facility would be increased availability of infrastructure.

The financial intermediary loan to IIFCL will support PPP infrastructure projects in road, power including clean and renewable energy, airport, and water supply and sanitation through (i) direct lending and (ii) take-out financing.

The $700Mn multitranche financing facility supports the availability of infrastructure financing and eventually, facilitate private sector investment in infrastructure public private partnerships (PPP).

Project Details

  • Project Officer
    Param Soothy, Ruben
    Sectors Group
    Request for information
  • Country/Economy
    India
  • Modality
  • Sector
    • Finance
Project Name
Accelerating Infrastructure Investment Facility in India
Project Number
47083-001
Country / Economy
  • India
Project Status
Active
Project Type / Modality of Assistance
  • Loan
Source of Funding / Amount
MFF Facility Concept 0077-IND: Accelerating Infrastructure Investment Facility in India
Source Amount
Ordinary capital resources US$ 700.00 million
Strategic Agendas
  • Inclusive economic growth
Drivers of Change
  • Private sector development
Sector / Subsector
  • Finance /

Gender
No gender elements
Description

Accelerating Infrastructure Investment Facility in India (AIIFI) is a $700 million multitranche financing facility to India Infrastructure Financing Company Limited (IIFCL). The project aims to facilitate private sector investment in infrastructure public-private partnerships (PPP). This is necessary as infrastructure supports economic growth and poverty reduction. The impact of the facility would be increased availability of infrastructure.

The financial intermediary loan to IIFCL will support PPP infrastructure projects in road, power including clean and renewable energy, airport, and water supply and sanitation through (i) direct lending and (ii) take-out financing.

The $700Mn multitranche financing facility supports the availability of infrastructure financing and eventually, facilitate private sector investment in infrastructure public private partnerships (PPP).

The facility was designed to have two tranches. ADB approved tranche 1 amounting to $400 million in October 2013 which supported 17 subprojects. Tranche 2 amounting to $300 million was approved in October 2015. However, due to the higher guarantee fee tranche 2 was cancelled in 2016. The government, however, agreed to return the guarantee fee to 0.25% and submitted a periodic financing request letter on 6 September 2018. Because tranche 2 has expired, this tranche is designated as tranche 3. Tranche 3 amounting to $300 million was approved on October 2018 and has supported 17 subprojects.

Project Rationale and Linkage to Country/Regional Strategy

Infrastructure deficit of India is arguably the critical development challenge facing the country. The weak state of infrastructure represents a drag on higher, sustainable gross domestic product (GDP) growth reflecting supply side constraints and stymies economic development, and with it, poverty alleviation efforts. In order to meet the growing aspirations of its citizens including better service delivery, India will have to identify new means to expand infrastructure financing given limits on fiscal space, external commercial borrowing, and bank balance sheets. The solution to overcoming these limits lies in part on increasingly leveraging private capital. To achieve the targeted real GDP growth rate of 8.4% in the Twelfth Five-Year Plan, the government estimates required infrastructure investment at around $1 trillion. Of this amount, approximately 47% is targeted to come from private capital as compared to around 38% under the Eleventh Five-Year Plan and 22% under the Tenth Five-Year Plan. It is also estimated that the infrastructure investment funding gap during the Twelfth Five-Year Plan would be about $113 billion. The shortfall is projected to be sourced from the private sector.

The government has identified the need for further reforms to enhance private sector participation in infrastructure. These include strengthening PPP support, promoting project finance schemes in infrastructure development, and developing new sources of take-out, project bond financing including infrastructure debt funds. With these reforms in place, the government plans to accelerate the infrastructure investment to above 9% of GDP during the Twelfth Plan compared with 7% during the Eleventh Plan. The government has targeted IIFCL, an apex organization established for promoting PPP projects, to play a larger role in the infrastructure financing space.

ADB India Country Partnership Strategy (CPS) for 2009-2012 emphasizes infrastructure development and is based on four pillars namely (i) inclusive and environmentally sustainable growth, (ii) catalyzing investment, (iii) increasing results orientation and knowledge solutions, and (iv) regional cooperation. AIIFI supports all pillars given the link between growth and infrastructure development and the need to mobilize financing. The CPS supports the role of financial intermediaries for providing long-term infrastructure financing and supports the PPP modality. This is consistent with the strategy envisaged under the draft CPS for 2013-2017.

Impact

Increased availability of infrastructure

Project Outcome

Description of Outcome

Facilitated private sector investment in infrastructure PPPs

Progress Toward Outcome

L3048 was closed 25 January 2017. Undertaking with covenants:With regard to unfulfilled covenants such as implementing an integrated management information system, ADB provided a waiver in the first tranche with the understanding that it would be included as compliance requirement in the second tranche. However, the second tranche was cancelled. The third tranche was approved on 23 October 2018 and approved output is carried over to December 2019. Management information systems have been adequately integrated based on their semi-annual progress report dated 30 September 2020.

IIFCL has complied with the covenants FY 2021.

Implementation Progress

Description of Project Outputs

1. Enhanced availability of long-term finance for PPP projects

2. Improved project management

Status of Implementation Progress (Outputs, Activities, and Issues)

Under Tranches 1 and 3, 34 PPP subprojects financed under the Facility:

(i) 27 subprojects through direct financing/ greenfield.

(ii) 7 subprojects through take-out finance.

(iii) takeout finance amount to $204.56 million.

Complied with.

Achieved.

Achieved.

Complied with.

Management information system is adequately integrated according to IIFCL's semi-annual progress report dated 30 September 2020.

Free limit was used for 4 subprojects. However, complete documents were provided and reviewed by ADB post-disbursement.

Completed for Tranche 1 and Tranche 3 disbursements are on track.

Geographical Location
Nation-wide

Summary of Environmental and Social Aspects

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples

Stakeholder Communication, Participation, and Consultation

During Project Design
This is a sequel to two earlier facilities - India Infrastructure Project Financing Facility I and II. This is in response to the vast infrastructure needs of India estimated at around $1 trillion and a continuing need to develop new models for infrastructure financing suitable to the Indian context and to further strengthen existing modalities. This facility will continue the success of the two earlier facilities while piloting new modalities for infrastructure financing through loan proceeds.This facility will support public-private partnership (PPP) in infrastructure under (i) direct on-lending in the form of senior and subordinate debt to subprojects in line with IIFCL's mandate ("Scheme") and (ii) take-out financing. This will also broaden the scope from the previous facilities which, aside from take-out financing would also include renewable and clean energy projects and initiatives in the lagging states. This aspect will support the government's efforts in meeting growth targets, expand PPP initiatives and foster inclusive growth.
During Project Implementation
ADB will, at its discretion, conduct reviews of the management, financial, and operational performance of the borrower and subprojects financed under the AIIFI initially after the closing of withdrawals. The review will include procurement procedures utilized by the AIIFI-financed infrastructure projects.The performance of AIIFI will be reviewed periodically at three levels - by IIFCL, (through the PMU on a quarterly basis), semi-annually by IIFCL's Board of Directors, and annually by ADB, and at the tripartite review meetings among GOI, ADB, and IIFCL. The review of performance for each quarter by the PMU will be completed by the 10th day of the month following the quarterly review. IIFCL's Board of Directors will review the performance semi-annually and will forward the semi-annual progress reports to ADB by the 10th day of the month following the semi-annual review. ADB will review the quarterly progress and semi-annual reports during the annual review missions and during the tripartite reviews chaired by the Government. In addition, a midterm review of the investment program will be conducted in FY2013-FY2018. The review will cover contract awards and disbursement, implementation progress including progress against institutional development and capacity building milestones, social and environmental aspects, and the status of the IPPMS. The midterm review will identify problems or weaknesses in the implementation arrangements, suggest nominal changes in scope, outputs, and due diligence, and agree on suggested changes.

Contact

Responsible ADB Officer
Param Soothy, Ruben
Responsible ADB Department
Sectors Group
Responsible ADB Division
Finance Sector Office (SG-FIN)

Timetable

Concept Clearance
03 Jun 2013
Fact Finding
22 May 2013 to 06 Jun 2013
MRM
09 Aug 2013
Approval
27 Sep 2013
Last Review Mission
-
Last PDS Update
20 Dec 2022

Funding

MFF Facility Concept 0077-IND

Financing Plan
  Total (Amount in US$ million)
Project Cost 700.00
ADB 700.00
Counterpart 0.00
Cofinancing 0.00
Loan Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards - 0.00 0.00 %
Cumulative Disbursements - 0.00 0.00 %

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 Access to Information Policy (AIP) 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.


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.

Title Document Type Document Date
Accelerating Infrastructure Investment Facility in India Environment and Social Safeguards Frameworks Jul 2013

Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) 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.

Tenders

No tenders for this project were found.

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.