ADB may freeze road funds over tardy use

The finance ministry is concerned over the failure of the National Highways Authority of India (NHAI) to disburse funds for the national highways project.

The ministry fears that this will make it difficult for NHAI to get $400 million in financial assistance from the Asian Development Bank (ADB).

Economic Affairs Secretary Rakesh Mohan is expected to soon convene a meeting with officials from ministry of road transport and highways and NHAI on the issue.

NHAI has sought $400 million for the second phase of the national highways project from ADB, but the agency wants the highways authority to first sign the deal for a $400-million loan taken earlier for the first phase. ADB also wants NHAI to improve its disbursal rate, ministry officials told Business Standard.

NHAI had earlier negotiated a $400 million assistance from ADB. Though the deal was finalised, NHAI never formally inked the deal as it had sufficient funds for its projects, the officials said.

They pointed out that NHAI had garnered a significant share of the country's total funding from multilateral agencies. Around $4.2 billion of a total aid of around $12 billion has gone to NHAI.

The National Highway Development Project, comprises over 5,800 km under the Golden Quadrilateral, around 7,300 km under the North-South, East-West corridors linking Kashmir to Kanyakumari and Silchar to Porbander.

The project envisages four-six laning of the existing highway network at an estimated cost of Rs 54,000 crore.

According to official data, the physical progress of the NS-EW corridor projects in July this year was only 8.77 per cent or 638 km. The project is scheduled to be completed by December 2007.

The Golden Quadrilateral project was only 52 per cent complete in July, with a mere 3,038 km of the 5,800 km completed.