Indian Railway Finance Corporation (IRFC) has received $750m from the Asian Development Bank (ADB) to fund the Railways Track Electrification Project.

This financing will help India’s railway sector to transition to electric power and cut down dependence on fossil fuels.

Along with the loan agreement signing, risk participation agreements were signed with private risk participants for the project.

Owned by the Government of India, IRFC will make use of the proceeds from the loan to install electric traction equipment across approximately 3,378km of existing railway lines.

This programme will enable the transition of passenger and freight traffic from diesel to electric traction.

The electrification assets will be leased to Indian Railways under a long-term lease agreement.

ADB vice-president for private sector operations and public-private partnerships Diwakar Gupta said: “This is a flagship project demonstrating ADB’s strategy of supporting key state-owned enterprises in strategic sectors.

“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 private sector operations department director general Michael Barrow said: “ADB is adding value in this transaction by providing and mobilising long-term, non-recourse project financing for critical infrastructure development.

“A significant value addition is the mobilisation of private capital through risk participation 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.”

The Indian Government has developed a five-year $132bn capital expenditure programme for the modernisation of Indian Railways.

Under this programme, Indian Railways will focus on network expansion and decongestion, enhancement of safety and passenger amenities, development of dedicated freight corridors, station redevelopment, procurement of rolling stock and other related assets, and electrification of railway tracks is part of this master plan.