The Hindu Business Line : ADB approves $71-m supplementary loan for M.P. project

New Delhi, Oct. 14 The Asian Development Bank (ADB) has approved a $71-million supplementary loan for an urban water supply project in Madhya Pradesh.

In March 2005, ADB and India had signed a $181-million loan agreement to support the project. However, progress was hampered by the slow award of contracts and a price increase since the project appraisal conducted in 2003, a statement issued by ADB said.

The Madhya Pradesh Government and the municipal corporations would now invest an additional $37 million in the project. UN-Habitat will co-finance a $500,000 grant through its Water for Asian Cities programme.

The project aims to improve the water supply services, sewerage and sanitation services, storm water drainage and solid waste management in the largest cities of Madhya Pradesh – Bhopal, Gwalior, Indore and Jabalpur.

“Without the additional funding, the project in its original scope cannot be completed, and the integrity of the urban infrastructure system for water supply, sewerage, and waste disposal will be severely undermined,” said Mr Hiroyuki Ikemoto, an Urban Economist at ADB’s South Asia Department.

Furthermore, most of the supposed beneficiaries would be connected to an incomplete system, as about 30 contracts would have to be abandoned due to lack of financial resources. The ADB loan is payable in 20 years with the interest rate determined in accordance with ADB’s London Interbank Offered Rate (LIBOR)-based lending facility.

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