India and ADB have signed $375 million pact for loans and grants to develop 800-km Visakhapatnam-Chennai Industrial Corridor, which is the first phase of a planned 2,500-km East Coast Economic Corridor. ADB had last September approved $631 million in loans and grants for the industrial corridor.
The Asian Development Bank said in a statement that it approved loans comprising a $500 million multitranche facility to build key infrastructure in the four main centers along the corridor — Visakhapatnam, Kakinada, Amaravati, and Yerpedu-Srikalahasti in Andhra Pradesh.
The first tranche of $245 million that was signed will finance subprojects to develop high-quality internal infrastructure in 2 of the 4 nodes of the corridor — Visakhapatnam and Yerpedu-Srikalahasti.
Another component of the approved ADB funds that the signatories signed was a $125 million policy-based loan that will be used for capacity development of institutions engaged in corridor management, provide support to enhance ease of doing business and for supporting industrial and sector policies to stimulate industrial development, it added.
The statement said along with the ADB loans, agreement was also signed last evening for a $5 million grant from the multi-donor Urban Climate Change Resilience Trust Fund that is managed by ADB to build climate change resilient infrastructure.
Among the outputs envisaged under the $245 million tranche-1 loan include strengthening and widening of a 29.6-kilometer section of state highway to four lanes to improve connectivity from Kakinada Port to National Highway 16, investments in smart water management in Visakhapatnam to reduce nonrevenue water and provide continuous water supply.
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The statement said tranche-1 loan will have a 25-year term, including a grace period of 5 years, a 20-year straight line repayment method at an annual interest rate determined in accordance with ADB’s LIBOR-based lending facility.
Deputy Country Director of ADB’s India Resident Mission L B Sondjaja said: “We estimate that by 2025, annual industrial output along the corridor will increase fourfold to $64 billion from about $16 billion in 2015 if investment opportunities are maximized over the next few years.”
Manila based ADB, established in 1966, is owned by 67 members – 48 from the Asian region.