Infra fund may get World Bank support

The Deepak Parekh committee formed to oversee fund raising for the proposed Rs 50,000 crore infrastructure fund envisaged by the Planning Commission is likely to approach the World Bank to contribute to the fund.

Also, surface transport minister, Kamal Nath, has sought the World Bank’s suggestion on the funding mechanism for the highways.

Speaking on condition anonymity, an official close to the development said, “The committee is looking forward to the World Bank’s participation in the proposed debt fund for infrastructure. We will seek funds to the tune of Rs 9,000 crore from the World Bank.” The Parekh Committee is likely to recommend ways to raise the fund by early June.

The Planning Commission envisaged forming the  corpus by tapping funds from domestic, as well as foreign pension and insurance funds and other multilateral agencies.

The ministry is currently in the process of inking an agreement with the multilateral agency to upgrade the single-lane highways.

On its part, the World Bank, in a representation made to the ministry, on Wednesday proposed various formats of lending assistance.

“In case of build operate and transfer (BoT)-toll, the viability gap payments can be done by the World Bank. In case of BoT-annuity, cash support can be done through the construction phase,” said the World Bank in a representation.

Cash support will be in the form of loan to NHAI to meet the annuity commitments. 

In a BoT-toll model, the private concessionaire is entitled to up to 40% viability gap funding from the government and earns toll revenue through the concession period. In annuity, the toll goes to the government while the developer is paid a fixed sum by the government as return on investment.

Speaking on the advantages of the proposals, the World Bank said, “This will lower the overall cost to the government, as World Bank lending can replace costlier borrowings by the government and by the private sector.”