ADB to Endow $750-Mn Loan to Fund Railway Track Electrification in India

The Asian Development Bank (ADB) has announced that it has signed an agreement to provide $750-million loan to Indian Railway Finance Corporation (IRFC).

This would be the prevalent single non-sovereign loan ever dedicated by ADB and would fund the Railways Track Electrification Project.

“IRFC, an entity owned by the Government of India, will use the proceeds from the loan to install electric traction equipment along approximately 3,378 kilometers of existing railway lines, which will enable the migration of passenger and freight traffic from diesel to electric traction,” ADB said in a press release.

The electrification assets will be rented to Indian Railways under a long-term lease agreement.

“This is a flagship project demonstrating ADB’s strategy of supporting key state-owned enterprises in strategic sectors,” said Diwakar Gupta, vice-president for private sector operations and public–private partnerships at ADB.

Simultaneously with the loan agreement signing, risk participation agreements were signed with private-risk participants for the project.

“ADB is adding value in this transaction by providing and mobilising long-term, non-recourse project financing for critical infrastructure development,” said Michael Barrow, director general - private sector operations department, ADB.

He added that a substantial value addition is the mobilisation of private capital through risk participations with the private sector. “As the aggregate funding requirement of Indian Railways is quite substantial, ADB is partnering with it to help tap into a diverse set of funding sources,” he said.