Date:15/12/2007 URL: http://www.thehindubusinessline.com/2007/12/15/stories/2007121551420600.htm

Back IIFCL to get $500-m ADB loan

Our Bureau

New Delhi, Dec. 14 Asian Development Bank (ADB) would provide India with up to $500 million in loans designed to promote public-private partnerships (PPP) between the Government and the private sector in order to ramp up investments in infrastructure.

The funds would be provided to government-owned India Infrastructure Finance Company Ltd (IIFCL) in multiple tranches over the next four years.

It is estimated that the money would help catalyse private sector investments in infrastructure of up to $3.5 billion.

IIFCL would provide funds at commercial terms with over 20-year maturity for infrastructure projects, which is not being currently provided by the market.

“Establishing IIFCL to provide funds for PPP is central to the Government’s infrastructure development strategy for addressing the market inadequacies and at the same time keeping the infrastructure development agenda moving forward,” Mr Ashok Sharma, Director of Governance, Finance and Trade division of ADB’s South Asia department.

IIFCL has a financing plan for fiscal year 2007-11 of $6 billion. Half of that will come from the Indian domestic market, including insurance, pension funds and the National Savings Scheme.

The other half will come from the international capital markets and bilateral and multilateral sources, including ADB.

Technical assistance

It has obtained its first international credit rating by an accredited international rating agency through a technical assistance from ADB.

A technical assistance of $500,000 is included to support the capacity development of IIFCL for managing market and credit risks and training IIFCL staff in subproject risk appraisal, management and mitigation.

Private-sector investments in infrastructure will help the government contain the fiscal deficit at all levels. Better infrastructure will help boost the economy and reduce poverty.

Infrastructure sector reforms in India are encouraging the participation of the private sector from domestic and international sources.