The Asian Development Bank (ADB) is extending a 420-million-U.S.-dollar, 25-year loan to the Indian state of Bihar for the expansion of the state's highway network, the lender said on Thursday.
The Bihar State Highways Project will improve about 820 kilometers of roads under the state government's highway development program. A 1-million-dollar technical assistance is also granted by the ADB for the reform and strengthening of road sector institutions.
Bihar, the country's third most populous state, is one of the poorest states in India. Its development is a key to the country's goal of regionally balanced growth, the ADB said in a press release. Many roads have deteriorated badly in the past years, and demand for improved road transport has increased sharply due to India's strong economy.
"The project is a core investment of the state government to transform the state dependent on subsistence farming to a state built on market-oriented agriculture and tourism and to attract private sector investment," said Hiroaki Yamaguchi, a Senior Transport Specialist with ADB's South Asia Department.
"It will improve access to socioeconomic services, increase employment opportunities and improve transport services which will reduce poverty in the region," the specialist said.
The project is the first in the state to adopt international best practices for procurement and contract management. Under the project, contracts are packaged into larger sizes to attract major companies which will then be able to sub-contract work to smaller local firms.
The technical assistance will help reform the state government's road construction department, which currently lacks modern project management and procurement systems, often resulting in cost and time overruns on projects.
The loan will run for four years with an expected completion date of January 2012, according to the ADB.