Manila, Philippines (BBN) – The Asian Development Bank (ADB) is extending a $420 million, 25-year loan to the Indian state of Bihar to upgrade and expand the state highway network to support economic expansion and poverty alleviation.

The loan will run for four years with an expected completion date of January 2012, an ADB press statement said.

The Bihar State Highways Project will improve about 820 kilometers (508 miles) of roads under the state government’s highway development program. A US$1.0 million technical assistance is also granted for reform and strengthening of road sector institutions. The government of India will provide the remaining $48 million for the project.

Bihar, the country’s third most populous state, is one of the poorest states in India. Its development is a key to the country’s goal of regionally balanced growth, according to the statement.

Many roads have deteriorated badly in the past. At the same time, demand for improved road transport has increased sharply in recent years due to India’s strong economy.

Currently, large areas of Bihar were flooded due to a breach in the embankment of Kosi River on 18 August. Under the Project, two project roads have been affected. After the water level recedes, these roads will be reconstructed.

The project is the first in the state to adopt international best practices for procurement and contract management. Under the project, contracts are packaged into larger sizes to attract major companies which will then be able to sub-contract work to smaller local firms, on-passing expertise.

BBN/SI/SI/AD-20September08-11:46 AM