Kerala stands to lose Rs 300 crore out of its Rs 1,404-crore soft loan from the World Bank (WB) for phase II of the Kerala State Transport Project (KSTP). Dissatisfied by the “slow progress” of the Rs 2,810-crore, four-year road project, a review mission from WB has recommended a partial rollback of the proposed credit line. This is likely to be officially conveyed by the Bank at the two-day review meeting at the Department of Economic Affairs, New Delhi, beginning on June 20. Phase II of KSTP road works is scheduled to be over by December 2018. A panel on review mission, including highway engineer Satish Sagar Sharma and road safety expert Sony Thomas, had inspected the progress on the project in Kasargod last week. Though barely 17 months are left for completion of the project, as much as 50% of the work is still pending on several segments. State government officials told FE that a World Bank team has conveyed its displeasure over the slow progress of the KSTP phase-II project to the government. However, only the amount meant for executing the road work that would inevitably be incomplete within the December 2018 deadline, would be denied.
The officials said the Kerala government would urge the bank to redirect the amount for other essential work components. The World Bank’s report points out that even after 70% of the time spent, only 26% of the work is over. “Work got delayed because a permanent project director was appointed only recently,” a senior official in the state government said. In some segments, it was socio-religious and communal pressures that held up the project. For instance, on the Chengannur-Ettumanur (47 km) corridor, work was held up for several months owing to the local-level bargaining over removing a cross fixed on an approach road. The work on this corridor is currently only 65% complete.
Out of the total soft loan, only Rs 377 crore has been utilised so far. From February 2017, the utilisation of the loan amount has been on a standstill. Trimming of the WB assistance would mainly affect the Punalur-Ponkunnam segment of the road, for which even the tender procedures have not been completed. The bank had earmarked $36 million for this particular leg. Another set of fund casualties would be the $22 million for the crucial road safety component and $5 million for office amenities. The Kerala government is worried that, in the long run, this penalty of sorts for the time overrun factor would affect its project credibility with other funding agencies. This is likely to be embarrassing, especially at a moment of celebration, when Kerala is riding the wave of glory over the completion of the Rs 8,000-crore Kochi Metro Rail project in less than four years.