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    Asian Development Bank to provide huge loan to India for railway track electrification project

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    Asian Development Bank

    The Multilateral funding agency Asian Development Bank (ADB) has signed an agreement to provide $750 million to fund the railways track electrification project. It is the largest single non-sovereign loan ever committed by ADB to Indian Railway Finance Corporation (IRFC).

    This programme of upliftment and advancement in current scenario will support India’s railway sector transition to electric power from heavy dependence on diesel.

    Parallelly Risk participation agreements were also signed with private risk participants for the said project along with the loan agreement signing. Indian Railway Finance Corporation (IRFC) will use the profits from the loan to install electric traction equipment along about 3,378 kilometres of existing railway lines to enable migration of passenger and freight traffic from diesel to electric traction. Since movement of goods and people is most crucial within the country, thus electrification of railway tracks is included in master plan.

    Under a long-term lease agreement, the electrification assets will be leased to Indian Railways.

    This is a flagship project and is strategically and scientifically defined with regards to financial volume and substantial size of work, demonstrating ADB’s strategy of supporting key state-owned enterprises in strategic sectors. This development programme involves network expansion and decongestion, improvement of safety and passenger services, development of dedicated freight corridors, station redevelopment, and procurement of rolling stock and other related assets.

    It also reflects a major push by the private sector operations of ADB into transport infrastructure, and particularly railways, a sub-sector in which traditionally such operations have not contributed a great deal.

    ADB is adding value in this transaction by providing and mobilising long-term, non-recourse project financing for critical infrastructure development.

    The total funding requirement of Indian Railways is quite substantial, ADB is partnering with it to help tap into a diverse set of funding sources.

    1 COMMENT

    1. Any information how the IRFC will be implementing the project? Will it be given to public sector companies? Or private players?

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