State ups borrowings for road projects

The roads, the upgrading of which was taken up under the Karnataka State Highways Improvement Project–II (KSHIP-II), will all be tolled, once completed.

Karnataka had so far been successful in obtaining $350 million from the World Bank (WB) and $300 million from the Asian Development Bank (ADB) to upgrade around 1,846 km, out of the 3,411 km. The government is tapping into various other sources to obtain funding for the remaining 1,565 km.

Recently, it managed to obtain an additional $15 million from ADB, for which the State Cabinet gave its approval on November 17.

For starters, toll will be levied on 269 km of State Highways, where works are said to have been completed in 30 months.

While the average estimated cost of laying one km of road is Rs 2.2 crore to Rs 2.5 crore under the “prescribed standards,” the proposed toll to be levied will be on par with NHAI rates.

The project, costing Rs 526.92 crore, is being implemented using funds from WB under the Engineering Procurement Contract (EPC). Work orders for 269 km were issued to five different contractors in March/April this year.

An additional 562.77 km of roads, which have been taken up for upgrading under Annuity Contracts at a cost of Rs 1,523 crore, are being constructed using WB funds. KSHIP will upgrade 615.05 km of roads using ADB funds.

Loan negotiations for the WB project were held on February 14-15, 2011, while the loan agreement was signed on May 30.

The loan amount will have to be repaid at 4 per cent interest from the fifth and sixth year onwards, within a span of 18 years, for the WB and ADB projects, respectively.

Under the WB project, 394 acres of private land and 14 acres of government land are in the process of being acquired, while under the ADB project, 325 acres of private land and 18 acres of government land are being acquired.

In addition to these projects, Karnataka Road Development Corporation Ltd (KRDCL), in association with KSHIP, is aiming at developing 400 km of highways under either EPC or modified/hybrid annuity basis.

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