It’s been almost two years since the BRICS bank (or the New Development Bank) was set-up. Headquartered in Shanghai and headed by former Infosys chairman KV Kamath, the BRICS bank’s lending progress till date has been impressive. Few days before the BRICS summit began in Xiamen, the bank finally approved projects worth $1.4 billion which had been in the pipeline for a year now.
One of them was the rural drinking water supply scheme in Madhya Pradesh. The BRICS bank has extended a $470 million loan to the government of India for executing the project. This is just the beginning for Madhya Pradesh. BRICS bank’s financial statements show that two other projects are envisaged in India and when approved, the total investment of would exceed $1 billion. More than $800 million of this money is meant for projects in Madhya Pradesh.
The $470 million line of credit for the rural drinking water project is in form of a sovereign loan being guaranteed by the Indian government. Once completed, the project is expected to benefit 3400 villages and provide potable water to over 3 million people in Madhya Pradesh’s rural areas. The Madhya Pradesh government has invited bids for selecting a project management consultant with a pre-bid meeting scheduled for September 5, 2017. The last date for submitting bids is September 26 and the project consultancy contract is worth Rs 8.43 crore. According to Madhya Pradesh government documents, the project consultant the cost of the entire project is Rs 4176 crore.
While this is the largest of the three projects in terms of money involved, the Shivraj Chouhan led government in Madhya Pradesh has also set the ball rolling for another road development project for which the BRICS bank will be extending a $350 million loan soon. This, like the drinking water project, is also a sovereign loan guaranteed by the government. The project envisages widening and rebuilding almost 1500 kilometers of roads in various districts of the state. For instance, one of the projects under this scheme involves widening of 215 kilometers of newly declared state highways in Gwalior, Ashoknagar, Guna, Tikamgarh, Bhind and Vidisha districts in the state. Another involves upgrading 269 kilometers of newly developed state highways in Chhindwara district. Similar upgradation works on state highways are also envisaged in Narsinghpur, Balaghat, Betul and Dindori districts. Civil contracts for all these projects are expected to be worth thousands of crores and will be developed through the public-private-partnership (PPP) mode.
The third project for which India will get a $250 million line of credit will be invested in solar energy and wind farms. It is not clear yet where these projects will be located. The loan will be disbursed to Canara Bank and will be guaranteed by the Indian government. According to BRICS bank, this loan will be released in three tranches.
While India & China have got the lion’s share of the loans from the BRICS bank, the money to be received by Madhya Pradesh is more than the loans being extended to Brazil, Russia & South Africa put together. The $470 million drinking water project in Madhya Pradesh is the most valuable among all projects being funded by the BRICS bank.
