Kerala State Transport Project (KSTP) is one of 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.
PHASE – I
I. Project Components
1. Transport Corridor upgrading
a. Road upgrading – 578 km
b. Pilot Water Way upgrading – 93 km (75 km excluding Kayal overlap
(including LA, Construction Supervision etc.,)
II. Road Maintenance Component – 1000 km as 3 years program (I Year 339 – II Year 350 & III Year 320 km)
III.Road Safety (Engineering) – Improving accident black spots
IV.Institutional Strengthening – Strengthening, PWD
Due to delay in land acquisition and contractual issues, the Phase-I road works and other components and LA for Phase II roads (Portal) were completed in December 31, 2010 by restructuring, deferring Phase-II upgradation works, as approved by State Government and the World Bank.
Accordingly in 2009, the State Government accorded Administrative Sanction for Rs. 1356 Cr to take up the Phase II roads including Perimpilavu – Perintalmanna
road as KSTP II (363 km), as standalone project by mobilizing funds from external agencies vide G.O. (Ms) No. 19/2009/PWD dated 09/04/2009. The Government posed the project for World Bank Assistance in 2010.
Accordingly the KSTP arranged the updating of DPR for the KSTP roads through M/s Wilbursmith Associates, with State funds as the concept note and Preliminary Project Report were to be accepted by the Bank. The cost towards DPR preparation was later reimbursed by the Bank under retroactive funding.
The Bank returned the proposal to take up the project to include the finance plus elements Road Safety and Institutional Strengthening and to explore the possibility of taking up the project under PPP concept with a leveraging assistance from Bank or other institutions. The Bank offered to extend Technical Assistance loan for project preparation if required.
Further to this, in 2011, the then Secretary to Government discussed the matter with the Government and submitted a fresh proposal including all the ‘Finance Plus’ elements for Rs. 1356 crore and held discussions with DEA and World Bank and they agreed for extending a leveraging assistance of 50% (overall) subject to fulfillment of the project readiness conditions prescribed by DEA.
In the meanwhile the DPR consultant completed a portion of the DPR enabling the State to full fill the project readiness criteria for inviting for negotiation. Since the DPR was updated on the basis of 2012 SoR the per km rate has increased necessitating revised Administrative Sanction. The Department of Economic Affairs (DEA) advised to revise the Administrative Sanction. The revised approval for Rs. 2005 crore was accorded in February 2013 (based on average per km ratio for the entire project).
The works were tendered in early 2013 onwards and the Project Appraisal was done by the World Bank April 2013.
As per G.O. (Rt) No.235/2020/P&EA dated 29.05.2020, Administrative sanction was issued to implement road reconstruction works for Rs3346.09 crores ensuring Green and Climate resilience utilizing World bank assistance of Rs.1200 cr. and KfW loan (German bank ) assistance of Rs.1800 crores. World Bank would provide 100 % assistance under Development Policy Loan. For KfW project loan assistance would be 70 % and state share is 30 %