Talking to newsmen here on Friday, principal desk officer of ADB in India, Richard Vokes also expressed the hope that at least three loans amounting to about $ 625 million were likely to be cleared by the bank during the current year. The rest of the loans would be subject to lifting of sanctions imposed on India in the aftermath of nuclear explosions.

The ADB officials also sounded optimistic about the lifting of the sanctions which would pave the way for clearance of loans amounting to $ 6 billion by the end of 2002. During 1998, the ADB cleared only one loan of the order of $ 250 million, against the estimate of $ 1.3 billion, because of the sanctions imposed by G-7 on India.

Vokes further said that the three Basic Human Needs (BHN) loans likely to be approved by the ADB during the year include Karnataka CoastalEnvironment Project, Madhya Pradesh Public Resource Management Programme and Urban and Environment Infrastructure Facility.

The loans planned for the year which are unlikely to be approved unless sanctions were lifted, include Gujarat Power Sector Development Programme, Power Transmission Improvement, Surat Motor Tollway and Railways Sector Improvement loans.

Vokes further said that although the World Bank was able to approve a major power sector reform loan for Andhra Pradesh (a non-BHN loan), the G-7 had clearly indicated that this should be treated as exception. This point, he added, was also reiterated by the G-7 members at the ADB board meeting.

As a result of sanctions, he said, the ADB could approve only one loan in 1998 for the Rajasthan Urban Infrastructure Development project.

Meanwhile, the ADB official also underlined the need for cofinancing of loans. Vokes pointed out that traditionally most of this cofinancing had come from "official" sources like bilateral donors and other multilateralagencies. The ADB, he added, would be placing greater importance on mobilising commercial cofinancing.

The bank of its part, he said, would be willing to provide certain forms of credit enhancement such as partial credit guarantee. The benefits of using an ADB guarantee, he said would include increased availability of cofinancing from commercial lenders, better pricing and longer maturities.

In case of India, he said, the value of guarantees coudl go up to $ 250 million per annum. Giving details of the 2000-2002 programme for India, he said, "the firm loan programme set out in the pipeline averages about $ 1.2 billion per year." Actual lending, he added, should average around $ 1 billion per year.

The main sectors covered by the lending programme include energy, transport, urban development and urban environment improvement, housing finance and the financial sector. In addition, Vokes said the ADB would continue to develop its state-level operations. He hoped that during the year Kerala would be thefocal state. Earlier, Gujarat and Madhya Pradesh had been selected as focal states.