World Bank provides US $770M for projects in Andhra Pradesh

HYDERABAD, India, Jan. 22, 2010 -- Loan Agreements for three projects amounting to US$ 770 million equivalent were signed today by the representatives of the Government of India, Government of Andhra Pradesh and the World Bank...

• Sanitation, water supply project is one of three to receive funding

HYDERABAD, India, Jan. 22, 2010 -- Loan Agreements for three projects amounting to US$ 770 million equivalent were signed today by the representatives of the Government of India, Government of Andhra Pradesh and the World Bank.

The three projects include the Andhra Pradesh Road Sector Project of US$ 320 million equivalent, the Andhra Pradesh Municipal Development Project of US$ 300 million equivalent and the Andhra Pradesh Rural Water Supply and Sanitation Project of US$ 150 million equivalent.

Mr. Anup K. Pujari, Joint Secretary, Government of India signed on behalf of the government for all the three projects, and Mr. Roberto Zagha, Country Director for India signed on behalf of the World Bank.

Ms D. Lakshmi Parthasarathy Bhasker, Principal Secretary, Government of Andhra Pradesh, Ms Pushpa Subrahmanyam, Principal Secretary, Government of Andhra Pradesh and Ms Chitra Ramchandran, Principal Secretary, Government of Andhra Pradesh signed on behalf of the Andhra Pradesh Road Sector Project, A.P. Municipal Development Project and A.P. Rural Water Supply and Sanitation Project respectively.

"Improvements in road transport, urban services and rural water supply and sanitation is vital to catalyze agricultural and industrial development and improve access to markets, jobs, and services to the people of Andhra Pradesh, especially its poor," said Roberto Zagha, World Bank Country Director for India. "These projects will help to remove the infrastructure bottlenecks in the state, which is considered a major constraint to sustain the state's impressive economic growth in recent years."

The US$ 320 million Andhra Pradesh Road Sector Project designed to improve quality, capacity and safety of roads in Andhra Pradesh will upgrade about 429 km of priority state highways and finance long-term maintenance of over 6,000 km of the state's core road network.

Road transport, which is vital to Andhra Pradesh's economy, accounts for more than 80 percent of freight and passenger traffic. Recognizing that an efficient transport system is critical for agricultural and industrial growth, the State Government is investing heavily to improve its transport infrastructure. For example, double lane roads on state highways have increased from 52 percent to 68 percent over the past six years. However, lack of roads maintenance and deteriorating road safety require urgent actions.

The project will help strengthen the State Government's ability to leverage its own resources with private sector financing for road infrastructure. This will help the state attract private sector participation in financing, development, and management of selected high traffic density corridors.

It will also support measures to reduce road accidents, including 'demonstration projects' on selected corridors.

The US$300 million Andhra Pradesh Municipal Development Project (APMDP) will finance sustainable, high-priority urban infrastructure projects, which will be selected and implemented by urban local bodies (ULBs).

The project will also support improvements in the state level framework that defines ULBs' autonomy, accountability, and incentives for performance, as well as the State Government's capacity to monitor ULBs' performances and to provide policy and technical support for their development.

Lastly, the US$150 million Andhra Pradesh Rural Water Supply and Sanitation Project is designed to improve water supply and sanitation services in 2,600 villages across 6 districts of the state. It aims to provide piped water to 2.1 million people and extend sanitation services to 1 million people who currently do not have access.

The loan for the Andhra Pradesh Road Sector Project is from the International Bank for Reconstruction and Development (IBRD) and has a maturity of 30 years, including a grace period of 5.5 years. The IBRD loan for Andhra Pradesh Municipal Development Project has a 28.5 year maturity including a 6.5-year grace period.

The credit from the International Development Association (IDA), the World Bank's concessionary lending arm, for the Andhra Pradesh Rural Water Supply and Sanitation Project, carries a 0.75 percent service fee, a maturity of 35 years and a 10-year grace period.

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