Maharashtra mulls over ADB loans to redo 21,000km of roads

To fund strengthening and widening of around 21,000km of roads, including those linking industrial clusters and providing farm-to-fork connectivity, the Maharashtra government is now looking at loans from international financial institutions. The project cost will be recovered through toll on commercial vehicles.

State Public Works Department (PWD) minister Chandrakant Patil told dna that they were looking at funding from international lenders, such as the Asian Development Bank (ADB), to undertake work on around 21,000km roads in Maharashtra. "The PWD has around 84,000km of road, and it is necessary to re-do around 21,000km of it," said Patil, adding that the work was expected to cost around Rs2 crore per km.

"The cost will be recovered through toll on large vehicles and budgetary support. The loans will be repaid within 10 years," he said, adding that the government financing these projects on its own would be cheaper than bidding them out on hybrid annuity basis. "Even private contractors will take loans from markets. Hence, we are planning to take low-interest loans from international institutions as this may work out to be cheaper," said an official.

As per the hybrid annuity model, the government pays 40% of the project cost to the concessioner, with the rest to be raised by the contractor.

While there will be no toll on two-lane roads, Patil said heavy vehicles will have to shell out road-users charge on four-lane roads. Smaller vehicles such as cars will be exempted from paying toll.

"We are looking at ensuring various types of connectivity through these roads, including that for industrial clusters, villages, airports, wildlife, farm-to-fork and tourist destinations," said a PWD official, adding that the plan was at a preliminary stage. Pilgrimage centres, such as the Ashtavinayaka' circuit (eight temples of Lord Ganesha located in Pune, Raigad and Ahmednagar), will also be linked through the project.

"We are working on the list of roads that can be included in the project. Since the National Highways Authority of India (NHAI) has taken over some of our roads, they will have to be excluded from the plan," said a senior PWD official, adding that this could be the largest such multilateral funding to be received by the state for the roads sector. The PWD looks after state highways (SH) and major district roads (MDR), with the Zilla Parishads being in charge of other district roads (ODR) and rural roads (RR).

In the past, the state has secured funding from the World Bank (WB) for road projects and has also approached the National Bank for Agriculture and Rural Development (NABARD) for funds to strengthen major district roads.