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The Asian Development Bank (ADB) has signed an agreement to provide $750 million equivalent in Indian Rupees in long-term financing—the largest single non-sovereign loan ever committed by ADB—to Indian Railway Finance Corporation (IRFC) to fund the Railways Track Electrification Project, as part of a broad modernization program that will help India's railway sector transition to electric power and away from dependence on fossil fuels.

Concurrently with the loan agreement signing, risk participation agreements were signed with private risk participants for the project. IRFC, an entity owned by the Government of India, will use the proceeds from the loan to install electric traction equipment along approximately 3,378 kilometers of existing railway lines, which will enable the migration of passenger and freight traffic from diesel to electric traction. The electrification assets will be leased to Indian Railways, the country's national railway system, under a long-term lease agreement.

"This is a flagship project demonstrating ADB's strategy of supporting key state-owned enterprises in strategic sectors," said ADB Vice-President for Private Sector Operations and Public-Private Partnerships Diwakar Gupta. "It also reflects a major push by the private sector operations of ADB into transport infrastructure, and particularly railways, a sub-sector in which traditionally such operations have not contributed a great deal."

"ADB is adding value in this transaction by providing and mobilizing long-term, non-recourse project financing for critical infrastructure development," said the Director General of ADB's Private Sector Operations Department Michael Barrow. "A significant value addition is the mobilization of private capital through risk participations with the private sector. As the aggregate funding requirement of Indian Railways is quite substantial, ADB is partnering with it to help tap into a diverse set of funding sources."

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