Kerala State Transport Project (KSTP) is  one off the important and successful endeavors of Government of Kerala (GoK) and Public Works Department (PWD) implemented with the assistance of the World Bank (WB).

This major initiative towards improvement of State Highway network has achieved substantial project completion by December 2010.

The reference to conceiving of this project goes back to 1996; by then GoK-PWD evaluated the lower efficiency of major road network due to rapid growth in traffic levels coupled with existing inadequate and deteriorating road infrastructure. To this respect the ‘Strategic Options Study’ (SOS), was carried out in 1997 covering nearly 9000Km of roads for prioritization.

This important study based on strategic parameters recommended a priority list of road corridors for further techno economic feasibility study and then Detailed Engineering.

In the year 1999, 2810 Km of roads recommended through SOS study were selected for Techno-Economic feasibility. Road Maintenance Component prioritisation and Institutional Development Strategy Studies were initiated in 2000.

The studies were funded by the bank in the form of TA Loan (4114 IN) of US$ 4.00 M. Detailed Design and Contract preparation of the project was carried out from 2000-2001. The project was appraised by the bank in Nov, 2001 with the project cost to the tune of US$ 336 million (` 1612 crores) followed by negotiations in May, 2002 which resulted in with loan (IBRD Loan No 4653 IN) assistance from the bank to the tune of US$ 255 million ( ` 1225 crores), with a Loan Repayment Period of 20 years including a five year Moratorium Period of project implementation.

The project was structured in to two phases, Phase I & II. Due to delay in land acquisition and cost and time overun the Phase II part of upgrading works could not be taken up and the period of loan was extended  for  2  years  up  to December  2010.  The project was restructured in  2008 in consultation with the Bank and completed in December 2010.