World Bank to provide $3 bn for road projects

New York: The World Bank has agreed to provide a USD 3 billion-loan for developing national highways.

The World Bank assistance will be utilised for converting 6,372 km of one-lane highways to two-lane, out of the total of 19,702 km of single lane highways in the country.

"They have (World Bank) for the first time informed me that they will be willing to fund the viability gap funding and also fund 50 per cent of our annuity projects," Nath said after concluding his week-long tour to the United States on Wednesday.

Nath also announced the construction of 18,000 kms of expressways in the country.

"We are going to set up an expressway division in the next fortnight and I propose bringing in legislation for Expressway Authority of India," he said.

"Roads in India are not merely a matter of connectivity but is an important component of inclusive growth," he said, adding the total project costs for 2009-2010 is estimated at USD 20 billion.

Both debt equity and pension funds are being invited to participate in this programme, he said. The share of private sector investment in this will be about USD 12 billion.

Over the next few years, out of the total projected investment of USD 80 billion, the private sector investment is estimated to be 45 billion dollars and this makes the road project the largest Public-Private Partnership in the world, Nath said.

To get a diverse set of investors on board, the minister has traveled to Singapore, London, Zurich and NYC to listen to their concerns.

"While India remains an attractive investment destination we have to see that the model of our projects are also investment attractive," he said.

The ICICI Bank CEO, Chanda Kocchar, noted that the 20 billion dollar-road programme offered an attractive opportunity for both equity and debt investors.

"The roads asset is an asset class that provides a very steady and stable return to the investors," she said.

"What we have been doing working with the government in the last few months is to try and look at the facilitative factors that can make all the road projects even more economically viable," she added.

Ajit Gulabchand of Hindustan Construction Company said the road project will create two kind of investors – those who are solely developers and those who want a steady annuity from it by investing in a toll.