$71 mn loan for water projects in Madhya Pradesh

Manila, Oct 14 (Xinhua) The Asian Development Bank (ADB) has approved a $71-million supplementary loan for an urban water supply project in Madhya Pradesh, the Manila, Philippines-based lender said Tuesday.

The project aims to improve the water supply services, sewerage and sanitation services, storm-water drainage, and solid waste management in major cities of Madhya Pradesh including Bhopal, Gwalior, Indore, and Jabalpur, ADB said in a statement.

The cities are trade, commerce, and tourism hubs, where growth potentials are constrained by poor water and sewerage infrastructure systems.

ADB and India signed a $181-million loan agreement in March 2005 to support the project. However, progress was hampered by slow awarding of contracts, which eventually led to a huge cost overrun due to rupee appreciation and price increases since the project appraisal in 2003.

'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 Hiroyuki Ikemoto, an Urban Economist at ADB's South Asia Department.

The ADB loan is payable in 20 years with interest rate determined in accordance with ADB's London Interbank Offered Rate-based lending facility, according to the statement.