JOIN US$250 million ADB funding for Metro rail
The Board of Directors of the ADB at its meeting in Manila approved the loan for the Bangalore Metro Rail Transit System Project, which will bring “substantial” economic and environmental benefits to the fast-growing city,” the ADB said in a statement.
The loan, to be repaid over a span of 18 years, will partly fund a total 42.3 kilometers of track, rolling stock, stations, and equipment for two key routes across Bangalore.
The 2.7-billion dollar project is being executed by the Bangalore Metro Rail Corporation, a special purpose vehicle, jointly owned by the Union and Karnataka governments.
“The project - ADB's first metro rail project in South Asia - will provide Bangaloreans with multiple benefits including reduced road congestion and pollution, and a safer, faster, fuel-saving public transport system for the city,” Senior Infrastructure
Finance Specialist in ADB's South Asia Department Anouj Mehta said.
While sanctioning the loan the ADB—Asia’s largest multilateral lending agency—said Bangalore, renowned for its information technology and biotechnology industries, is one of the fastest growing urban centers in the country, with a population now in excess of six million.
However, an overloaded public bus system and soaring use of cars and motorbikes are undermining growth opportunities and degrading the environment.
Pioneering model
“The Bangalore metro project is pioneering, in using the non-sovereign public sector lending modality, with excellent replication potential for India and Asia.
“This is amongst the first major metro rail systems in India to use a leveraged finance model combining government funds with commercial loans,” Hayato Hoshi, Investment Specialist in ADB's Private Sector Operations Department said.
Metro rail systems are traditionally largely funded by the government, but with state resources increasingly limited and high initial capital costs, a new model is critical for the sector, ADB experts said.
Besides the ADB loan, the Bangalore Metro project is also being funded by Official Development Assistance loan from the Japan International Cooperation Agency.