NEW DELHI: The World Bank has agreed to examine new ways of raising its funding commitment for India’s highway projects, Road Transport and Highways Minister Kamal Nath said here on Wednesday.
After his meeting with World Bank President Robert Zoellick, who is here on a four-day India visit, Mr. Nath said: “The World Bank has agreed to look at funding viability gap and in the annuity projects not only in terms of financing but in terms of institutional support as well… We are also working with the Ministry of Finance for a $2.96-billion loan for converting 6,300 km one-lane roads into two-lane ones. That is now in an advanced stage.”
Viability gap scheme
Funds and concessions under the viability gap scheme are provided to developers to make the projects viable. On the other hand, annuity is a funding model under which the project developer finances, builds and maintains the contract in exchange of annual grants from the government.
Mr. Nath pointed out that as there were many projects at hand to be funded by the multilateral agency, the assistance may be provided in tranches and that decision would be taken by the Finance Ministry. “There are so many projects on the social sector...so we may take it in tranches. But the World Bank has to look at it holistically...there is a limit to what the Bank can give to us as a whole. That appropriation is done by the Finance Ministry,” he said.
Asked about the bank’s response to financing of highway projects, Mr. Zoellick noted that it could increase funding to India after consultations with shareholders and pointed out that talks were on with the Finance Ministry in this regard.
“There are so many different projects in India...but there is even more that we can do for India. My challenge is to go back to some of our shareholders so that we can give more in India. We know that the national highways programme is very important. So we are also in talks with the Ministry of Finance,” he said.
In response to Mr. Nath’s request for aid from the World Bank and its private lending arm IFC in the formulation of mega projects, Mr. Zoellick said: “As he [Nath] said, it is partly a question of financing and it is also a question of trying to apply the experience being followed in projects around the world recognising, of course, that India has its unique circumstances.”
Mr. Nath had said earlier that for the newly set up Expressway Authority, the government would take advantage of the World Bank and IFC’s experience in such projects not only in terms of financial resources but also on a wide spectrum of issues which they have dealt with globally.