Up to Rs 4,000 crore sought to upgrade 2,600 km network.
The Karnataka government is seeking a financial assistance of up to Rs 4,000 crore from the Asian Development Bank (ADB) for upgrading 2,600 km of additional road network in the state. The ADB has already shown interest in extending assistance to the state government. However, the exact amount is yet to be decided.
The loans carry a tenure of 21 years and the repayment period starts from the eighth year onwards. The first seven years will not carry any interest. The department of public works, which executes these road projects, had borrowed Rs 2,300 crore in 2000 and the repayment of the same commenced in 2007.
For the year 2009-10, chief minister BS Yeddyurappa, also the state finance minister, has made a budgetary allocation of Rs 500 crore to Karnataka Road Development Corporation Limited, for instituting a Karnataka Road Fund to develop 10,000 km of state highways and important rural roads. Another Rs 380 crore has been granted for development of 3,400 km of highways under the KSHIP-II. In addition to this, Rs 400 crore has been allocated under the Chief Minister’s Rural Road Development scheme.
According to a senior official in the state public works department, the funds are expected to be made available to the state government in 2010-11 by the ADB. “The bank has promised to extend financial assistance to us. While, they are yet to indicate the exact amount, the state government is seeking up to Rs 4,000 crore from them,” N Lakshmana Rao Peshve, secretary, department of public works, ports and inland water transport department, said.
He said in case the ADB does not sanction Rs 4,000 crore, the department would tap the doors of other external funding agencies or may even go in for a bond issue to raise funds in the domestic market.
He said the assistance from ADB will be in addition to the Rs 1,200 crore recently sanctioned by the World Bank for developing another 826 km state highways under the Karnataka State Highway Improvement Project-II. The state government is likely to sign an agreement with the World Bank for extending a five-year soft loan at Washington in September this year, he told Business Standard.
Karnataka has 52,000 km of major district and state roads, 21,000 km of state highways and 3,900 km of national highways. The state’s Vision for 2020 is to carry out two-laning of all state highways. As of now only 4,000 km of roads are two-laned in the state.
The World Bank had extended Rs 2,400 crore under KSHIP-I for improving 2,400 km of roads. This was executed between 2001 and 2006.
In addition to these two externally-funded projects, Karnataka has taken up an initiative to improve 10,000 km of roads under the public private partnership (PPP) model on a design, build, operate and transfer framework.
It has already received 29 bids from major infrastructure developers including Reliance Infrastructure, GMR Infrastructure, L&T, KMC among others. The bids are likely to be finalised during October this year, Peshve said.
The revenue model worked out under the PPP model will ensure collection of toll by the operators. In addition to this, they will be entitled to one acre of land for every 5 km of road developed, for commercial exploitation.
The road developers will have to provide utility corridor and levy a fee for usage of utilities per metre per month. Each road will be developed into a four-lane with two service roads. Apart from a construction period of two to three years, the developers will get a concession of 20 years, he added.
