Project Signing: World Bank Provides $50.7 Million to Improve Road Network in Tamil Nadu

July 6, 2010

CHENNAI, July 6, 2010: A Loan Agreement of $50.7 million equivalent for Tamil Nadu Road Sector Project was signed today by the representatives from the Government of India, the Government of Tamil Nadu and the World Bank. The signatories to the Agreement were Mr Anup K. Pujari, Joint Secretary, on behalf of the Government of India, Mr G. Santhanam, Secretary, Highways and Minor Ports Department, Government of Tamil Nadu, and Ms Preeti Kudesia, Senior Public Health Specialist, World Bank, India.
The Project has been designed to improve quality and sustainability of the core road network in the state of Tamil Nadu. This funding is additional financing to the Tamil Nadu Road Sector Project, which became effective on October 31, 2003, with a loan amount of $348 million. Thus far, the Project has improved around 850 km of roads and upgraded 570 km of existing state highways to two lane roads.
Road transport, accounting for about 80 percent of freight and passenger trips, is the dominant mode of transport in Tamil Nadu. Demand for road transport has increased rapidly with vehicle registrations growing by about 10 percent annually since year 2000. However, infrastructure supply has not kept pace with demand, leading to serious network deficiencies. About 20 percent of the state highways and major district roads are in poor condition.
“Project performance indicators pertaining to reduction in road accident fatalities, reduction of travel time, and adequate allocation of resources for maintenance have met end-of-project targets,” said Pratap Tvgssshrk, World Bank Transport Specialist and Project Team Leader.
The additional financing will help meet a cost overrun, primarily caused by an increase in the prices of construction materials and an appreciation of the Indian Rupee vis-à-vis the Dollar.  By project’s end, 1,380 km of roads will be improved and another 720 km upgraded to two lanes in the core Tamil Nadu network.  In addition, the Project will help enhance road safety by improving several accident-prone locations and achieve better management of the network through strengthening of the operational capacity of the Highways Department.

The additional loan from the International Bank for Reconstruction and Development (IBRD) has a 25 year maturity including a 5-year grace period.

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