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The Government of India and Asian Development Bank have signed an agreement for a $350-million loan to upgrade district roads in Madhya Pradesh in central India.

The Madhya Pradesh District Connectivity Sector project will improve about 1,600 km of major district roads in the state through lane widening, surface improvements and strengthening of culverts and bridges.

Tarun Bajaj, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, Ministry of Finance, who signed the loan agreement on behalf of Government of India, said that the project would lead to improved road transport connectivity in Madhya Pradesh through reconstruction and rehabilitation of major district roads to all-weather standards. The project will have innovative elements like creation of State Highways Fund on PPP model, toll plus annuity on hybrid model of BOT-Toll and BOT-Annuity, and border check-posts on PPP model to increase revenue and control overloading and damage to state roads.

In addition to improving the roads, the project envisages the inclusion of a five-year performance-based maintenance contracts integrated as an adjunct to the construction contracts, to ensure road assets are constructed to higher standards and well maintained after initial work is completed.

ADB’s loan will cover 70 per cent of the total project cost of $500 million, with the Madhya Pradesh government providing the balance of $150 million. It is expected to be completed by April 2018.

Madhya Pradesh has a road network of about 127,000 km, including 4,700 km of national highways, 11,000 km of state highways, and 20,000 km of major district roads. Rural roads make up the balance.

The Government of India and Asian Development Bank also signed a $50.2-million loan agreement to continue to support improvements to transmission and distribution systems in Assam for better electricity service to end users.

The fourth tranche loan under the $200-million multi-tranche financing facility for the Assam Power Sector Enhancement Investment Programme will built on earlier loans which aimed to improve operational efficiency in the sector through better transmission and distribution networks.

The project, which is expected to be completed by December 31, 2018, will help Assam Power Distribution Company Ltd add an additional 222 MVA substation capacity and reduce system losses by 4 per cent. Part of the loan will be used to enhance energy efficiency through renovation and modernisation of existing 33/11kV substations. It will also deliver a dedicated power supply to tea estates by undertaking feeder separation for better service to the economically important tea sector.

The loan of $50 million from ADB’s ordinary capital resources makes up to 74 per cent of the total project cost of almost $68 million, with the Assam government providing counterpart finance of $18 million.

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