India: Accelerating Infrastructure Investment Facility in India - Tranche 1
ADB is helping India to accelerate infrastructure development through increased private sector investment. The financial intermediary loan to state-owned Infrastructure Finance Company Ltd will support public-private partnership (PPP) projects in road, railway, airport, urban infrastructure, and power, including renewable energy.
South Asia Department
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|Project Name||Accelerating Infrastructure Investment Facility in India - Tranche 1|
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Private sector development
|Sector / Subsector||
Finance / Infrastructure finance and investment funds
|Gender Equity and Mainstreaming||No gender elements|
Project 1 (Tranche 1) involves a financial intermediary loan of $400 million from the ordinary capital resources of the Asian Development Bank to India Infrastructure Finance Company Limited, to be guaranteed by India, to support renewed government efforts to accelerate infrastructure growth through increased private sector investment given competing pressures on fiscal resources.
The loan supports for financing of public-private partnership (PPP) infrastructure projects through (i) direct lending; (ii) take-out financing; and (iii) subordinate debt, all in line with IIFCL's operational mandates.
|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 a 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. 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, and 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. In this context, the government has targeted IIFCL, an apex organization established for promoting PPP infrastructure projects, to play a larger role in the infrastructure financing space.|
|Impact||Increased availability of infrastructure|
|Description of Outcome||Facilitated private sector investment in infrastructure PPPs|
|Progress Toward Outcome||17 PPP subprojects financed under the Facility, with total project cost of approx. $5.4 billion: (i) 12 subprojects through direct financing; (ii) 5 subprojects through take-out finance|
|Description of Project Outputs||
1. Enhanced availability of long-term finance for PPP subprojects
2. Improved project management
|Status of Implementation Progress (Outputs, Activities, and Issues)||
Fully disbursed as of Jan. 2017. Loan closed.
17 PPP subprojects financed under the Facility: (i) 12 subprojects through direct financing; (ii) 5 subprojects through take-out finance
With regard to unfulfilled covenants such as implementing an integrated management information system, ADB had provided a waiver in the first tranche with the understanding that it would be included as a compliance requirement in the second tranche. However, while the second tranche stands cancelled, ADB will continue to closely monitor compliance given the importance of the condition in light of IIFCL's expanding portfolio and range of products.
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||
This is the first tranche of the facility which 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.
|Procurement||All procurement to be financed under an ADB loan will be carried out in accordance with ADB's Procurement Guidelines (2013, as amended from time to time). ADB will encourage IIFCL to require its subborrowers to adopt internationally competitive bidding procedures to the extent possible when the amount of the investment is unusually large and economy and efficiency can be gained by following such procedures. For procurement of goods and services to be financed by subloans from the ADB loan, IIFCL will ensure that the price paid is reasonable and that account is taken of factors such as time of delivery, efficiency, and reliability. For build-operate-transfer projects and their variants, if the subproject sponsor or engineering procurement and construction contractor is selected through competitive bidding among international entities in accordance with procedures acceptable to ADB, such engineering procurement and construction contractor may apply its own procedures for procurement provided that such procurement is for goods, services, and works supplied from or produced in ADB member countries.|
|Responsible ADB Officer||Hoshino, Takuya|
|Responsible ADB Department||South Asia Department|
|Responsible ADB Division||Public Management, Financial Sector and Trade Division, SARD|
India Infrastructure Finance Company Limited
5th Floor, Block Number 2, Plate A & B,
NBCC Tower, East Kidwai Nagar,
New Delhi, India 110023
|MRM||09 Aug 2013|
|Approval||21 Oct 2013|
|Last Review Mission||-|
|Last PDS Update||11 Sep 2019|
|Approval||Signing Date||Effectivity Date||Closing|
|21 Oct 2013||22 Jan 2014||21 Feb 2014||31 Dec 2016||-||25 Jan 2017|
|Financing Plan||Loan Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||400.00||Cumulative Contract Awards|
|ADB||400.00||21 Oct 2013||0.00||0.00||0%|
|Cofinancing||0.00||21 Oct 2013||400.00||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.
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Evaluation Documents See also: Independent Evaluation
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