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Talks soon with IBRD for $600-m loans

Shaji Vikraman

P. Manoj

NEW DELHI, March 30

THE Government is set to negotiate with the World Bank early next month two non-basic human needs (BHN) loans aggregating over $600 millions, following indications of easing of norms.

The test case will be a proposed loan for renewable energy aggregating over $200 millions followed by a $480-million loan for the National Highways Authority of India (NHAI), according to Government officials. Although both these are non-BHN loans which means that sanctions apply in this case, the Government has received indications that the definition of basic human needs may be widened to facilitate sanction of these loans.

If this is done by the IBRD, others such as the Asian Development Bank (ADB) would follow suit swiftly, officials said. Several projects have been lined up for assistance in India by the ADB. The sanctions were imposed in 1998 after India conducted nucle ar tests.

The first of the negotiations were scheduled to take place in Washington in the second week of April, Government officials said.

Besides these two loans, progress has also been made in the case of a proposed technical assistance for $75 million for spectrum management and for the Telecom Regulatory Authority of India (TRAI).

The negotiations on the NHAI loan were scheduled to start from April 10. This is now expected to be delayed by a few days to have a clear picture of the actual fund requirement from the multi-lateral funding agencies for the Rs. 54,000-crore National Hig hways Development Project (NHDP). The NHAI has factored in a Rs. 20,000-crore assistance from the World bank, ADB and OECF for funding the NHDP, which is awaiting the approval of the Union Cabinet.

The IBRD loans will have a maturity of 20 years, inclusive of a grace period of five years. This time the Government may opt for hedging the loan although in the past, it had taken on the exchange risk. Talks were also on this regard, officials said. The Bank provides both single and multi-currency loans. Talks are also on for providing assistance to Uttar Pradesh for power sector reforms.