World Bank Approves $300 Million for the Second Tamil Nadu Road Sector Project, India

April 28, 2015

About 1,175 km of Tamil Nadu’s core road network to be upgraded and maintained

WASHINGTON, April 28, 2015 - The World Bank today approved a $300 million loan for the Second Tamil Nadu Road Sector Project to improve the capacity, quality and safety of Tamil Nadu’s core road network. It will strengthen the institutional capacity of the highways department through better policies, operational systems and procedures.

The first project – Tamil Nadu Road Sector Project – supported upgrading (724 km) and maintaining (1,030 km) roads along with several initiatives to strengthen institutions as well as road safety. These included a road safety policy, a Road Accident Database Management System, a Road Safety Fund, and black-spot improvement. During the project period, the number of fatalities from road accidents per 10,000 registered vehicles reduced from 19 in 2003 to 11 in 2012. The percentage of roads in poor condition in the state’s core road network (CRN), comprising state highways and major district roads, reduced from about 35 percent to 8 percent. Also, the share of roads with less than 2-lane width in CRN decreased from 60 percent to 38 percent.

Even as the capacity of the road network and the state’s ability to manage the same have improved, the challenges facing the sector too have escalated on account of rapid economic growth and the consequent increase in the number of vehicles and the demand for road transport. Over the last decade, even as the length of the national highways and the core road network in the state has increased by about 50 percent, the number of registered vehicles multiplied by 160 percent. To achieve the Government of Tamil Nadu’s Vision 2023 of upgrading about 20,000 km of roads over the next 10 years, the highways department needs to more than double its implementation capacity. 

To help the state fulfill its vision, the Second Tamil Nadu Road Sector project will address the accumulated investment needs by supporting upgrading of 1,175 km of the core road network  through adopting contracting arrangements that encourage economies of scale and offer stronger incentives for performance, viz., Engineering Procurement Construction (EPC) contracts (430 km), Public Private Participation (PPP) concessions (145 km) and long-term Performance-Based Maintenance Contracts (PBMC, 600 km).

“While Tamil Nadu has made impressive economic progress, the Government of Tamil Nadu recognizes the need for improving infrastructure, particularly road infrastructure, to make growth more inclusive.  Better roads will help improve access to markets, healthcare and education while creating new jobs and boosting agriculture,” said Onno Ruhl, World Bank Country Director for India. “Rapid growth has also led to substantial increase in vehicle ownership. An important aspect of the project will be to strengthen road safety in order to bring down the number of fatalities and serious injuries from traffic accidents in the state,” Ruhl added.

For better road safety outcomes, the project will support improved design features in the project-financed roads and two district-level and one corridor-level initiatives which will demonstrate a more comprehensive intervention involving multiple stakeholders including the departments of transport, police, health and education. In addition, the project will support a comprehensive road safety strategy at the state level.  

“The first project had a number of institutional successes but there is also an unfinished agenda. The project will support the Government of Tamil Nadu in implementing a more sustainable strategy involving innovative contracting structures with scope for greater efficiency, a gradual shift towards more optimal allocation of budgetary support towards capacity expansion and maintenance and a more coordinated approach to road safety at the state and field levels,” said Pratap Tvgssshrk, Senior Transport Specialist and World Bank’s Task Team Leader for the project.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 7-year grace period, and a maturity of 29 years.

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