A team of highly placed officials from ADB are currently in the state to assess whether the conditionalities laid down by the bank with regard to the loans have been fulfilled. Speaking to The Financial Express, Peter L Pattison, senior project implementation officer, ADB, however, admitted that the existing political uncertainty in the country as well as the ongoing Kargil conflict may delay clearances for several loans in the pipeline for the Indian government.

Talking about the second tranche of $50 million incentive loan for the state for executing its public sector reforms programme which, though due in April this year, was deferred on account of test-firing of Agni by India, Pattison said the chances of the loan getting cleared in the board meeting of the bank to be held in July werevery bright. What has also gone in India's favour is the recent softening of the US stance on sanctions imposed on the country in the wake of the Pokhran blasts in May last year.

When asked whether ADB was satisfied with the work done by the state government with regard to fulfilling the preconditions laid by the bank, Pattison said that "progress has been made in this regard and appropriate steps are being taken in accordance with the line of agreement." It may be mentioned that the ABD has already released a $100 million first tranche of the incentive loan way back in 1996. the bank had laid some conditionalities including privatisation of the Gujarat Industrial Investment Corporation (GIIC), Gujarat Electronics & Communications Limited and the Gujarat Tractor Corporation Ltd.

In addition, the bank had asked the state government to review the performance of its public sector enterprises and take steps to shut down the 100 per cent sick ones. The state government, on its part, has already evolved aframework for the merger of several PSEs and has initiated restructuring exercises for the state electricity board and the Gujarat Maritime Board. However, it has so far been unable to privatise the three PSEs identified by the ADB as it has not been able to find suitable private companies offering the right price for the government equity.

With regard to the $200 million sought by the Gujarat government for development of the power sector, the ADB official said the loan was almost in its final stages of clearance and should be through soon. According to Pattison, the state government has initiated steps to fulfil the pre-conditions laid by the bank in this regard which includes setting up of a state electricity regulatory authority and a tariff regulatory commission.

In addition, the state government has also given an assurance that the power tariffs charged from the agriculture sector are likely to be revised once the tariff regulatory commission puts up its recommendations for new rates for differentsectors. The GEB has already submitted a draft on revision of tariffs which have been stagnant since 1996 and has led to an additional subsidy burden of Rs 1,600 crore on the state government. However, the bank has also been told that the possibility of an immediate revision of tariffs is bleak with elections round the corner.

The ADB official also said the bank was seriously considering disbursal of another $150 million infrastructure loan sought by Gujarat for the assistance of private enterprises coming forward to develop infrastructure projects in the state in the near future.