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National Highway project to get $590 million World Bank loan

Anil Sasi

The World Bank is likely to release another $590 million loan for the Rs 580 billion national highway development project, in the next couple of weeks. The credit, which forms the bank's second tranche of loan for the project, would be utilised for four-, six-laning of stretches on national highway-2 connecting Delhi and Calcutta.

While the Bank's first tranche of $516 million, released in June last year, is being used for multi-laning of 477 km of national highway-2 (NH-2) between Agra (in Uttar Pradesh) and Barakar (in Bihar), the second tranche loan would be used for upgrading the remaining sections on the NH-2, officials said.

The World Bank would provide around $500 million variable spread rate and single-currency loan with a grace period of five years and 20 years to maturity. Besides the $516 million loan, NHAI has already got a $180 million loan from the Asian Development Bank for four-, six-laning of national highway between Surat and Manor on NH-8, officials added.

Negotiations are at present on for the second tranche of ADB's loan of around $200 million. The World Bank would provide $500 million every year till 2006-07 and Asian Development Bank $ 250 million per year over the next seven years.

Multilateral funding for the ongoing NHDP, comprising four-, six-laning of 13,252 km of national highways, is to the tune of Rs 200 billion, while another Rs 200 billion will come from the cess on petrol and diesel. The amount will be used for part-financing the Rs 540 billion (at 1999 prices) project, which entails four- six-laning of 13,252 km of national highways in the country.

The remaining portion, amounting to Rs 140 billion would come from market borrowings and through private participation. NHAI would raise Rs 135 billion through market borrowings over the next four years, of which Rs 6.63 billion have already been raised through two tranches of capital gains exempt bonds.

The first phase comprising over 6,000 km of Golden Quadrilateral project connecting four metros of Delhi, Bombay, Madras and Calcutta with four-six lane would be completed by 2003 and NHAI is expected to award all stretches on the GQ by June this year.

The second phase comprising over 7,000 km of north-south corridor joining Kashmir to Kanyakumari and east-west corridors connecting Silchar with Porbandar is targeted for completion by 2007.

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