Multilateral lending agency Asian Development Bank (ADB) today said it has approved a $250 million loan to part-finance the Bangalore Metro Rail Transit System Project.
"ADB is extending up to $250 million for a metro rail system in Bangalore that will bring substantial economic and environmental benefits to the fast-growing city," it said in a statement.
The bank's board of directors has approved the loan, which will partly fund a total 42.3 kilometres of track, rolling stock, stations and equipment for two key routes in Bangalore.
The Bangalore Metro Rail Transit System Project (BMRTSP) has a total cost of $2.7 billion and is scheduled to be completed in 2013.
The Bangalore Metro Rail Corporation, a special purpose vehicle, jointly owned by the government of India and the Karnataka government, is carrying out the project.
"The project -- ADB's first metro rail project in South Asia -- will provide Bangaloreans with multiple benefits, including reduced road congestion and pollution and a safer, faster, fuel-saving public transport system for the city," ADB Senior Infrastructure Finance Specialist (South Asia Department) Anouj Mehta said.
He added that the financing model of the project should lead to faster development of urban transport in India by means of bringing in more commercial debt and private finance.
Bangalore has a population of over 60 lakhs, but lacks a proper public transport system, the ADB said, adding that the metro rail project could prove to be critical for infrastructure development in the city.
"The project is pioneering in using the non-sovereign public sector lending modality, with excellent replication potential for India and Asia. This is amongst the first major metro rail systems in India to use a leveraged finance model combining government funds with commercial loans," ADB Investment Specialist Hayato Hoshi said.
Besides the ADB loan, the Bangalore metro project is also being funded by the Japan International Cooperation Agency.
