ADB will assist Rajasthan to improve road connectivity
India will receive $190 million loan from Asian Development (ADB) to improve the condition of roads in state of Rajasthan. Under this project of state highways and major district roads will be upgraded to two-lane or intermediate-lane standards. 754 kilometers of roads will be renovated affecting about 26 million people in 14 districts of Rajasthan. The loan agreement was signed between Shri Sameer Kumar Khare, Additional Secretary (Fund Bank and ADB), and Department of Economic Affairs in the Ministry of Finance, on behalf of the Government of India, and Mr Kenichi Yokoyama, Country Director of ADB’s India Resident Mission.
This is the part 2 of ADB’s loan assistance to Rajasthan in improving road connectivity, the first one was $220 million loan in July, 2017.ADB has provided loans to other states of India also to improve road connectivity. The project aims to construct around 200 bus stops, 70 km of hard shoulder, and 2 km of raised sidewalk on project roads. Public Private Partnership models like Hybrid Annuity Model (HAM) and Engineer Procure construct (EPC) will be taken for upgradation of roads.
Engineer Procure construct (EPC) Model:
Under this type of contract, the whole project is financed by the government and project is bound to be completed in a particular time span. Private contractors and Engineers design and detail the project, procure the labour and material (expenditure is provided by the government), complete the task and hand it over to government.
Build Operate Transfer (BOT) mode:
In this type of contract, contractor builds the road, operates it for specific time frame and then transfers it to the government. Contractor can recover his expenses either through six monthly annuities from government or by toll collection over years.
Hybrid Annuity Model (HAM):
In this model government’s contribution is 40% during first five years and the remaining 60% is to be raised by the contractor through shares or equities. Government will pay the remaining 60% depending on the quality of assets created after completion of project. Toll rights rest with NHAI.
Asian Development Bank (ADB):
A financial institution that came into being in December, 1966 and is modeled on the lines of World Bank (weighted voting). It is headquartered in Manila, Philippines. There were 31 members when it was established and the number has now grown to 68. It has its members all over the globe and not only in Asia. India was among the founding member nations. Japan has the highest share of capital contribution in ADB, India stands at 4th.