Manila, Philippines – A US$300 million loan will help develop an efficient, safe, and reliable road transport system to promote sustainable economic growth in the southern part of Gansu province in the People’s Republic of China (PRC).

Gansu province is one of the poorest areas in the PRC, ranking 30th among 31 administrative areas. Remote and isolated with harsh natural conditions, the project area suffers from inadequate road infrastructure, which is a major cause of the high incidence of poverty.

More than half of the towns do not have all-weather roads, and about a fourth of the villages have no road access at all. The existing national highway that links to Sichuan province is in poor condition, and no rail lines or other non-road transport modes are available.

“The road transport network in southern Gansu needs to be improved to ease access to essential services and to link this poor, isolated region to economic growth centers,” says Xiaohong Yang, an ADB Senior Financial Analysis Specialist.

The project will construct a 134-kilometer expressway from Wudu to Guanzigou and upgrade 357 km of associated rural roads. It will also construct 200 town bus stations, pilot-test a road transport action plan in Longnan, and provide training and consulting services to strengthen the capacity of local transport authorities.

The project expressway is expected to benefit about 4.6 million people by reducing travel time between Wudu and Guanzigou by 136 km or 5-7 hours, and allowing rural households to access a wider economy and social services through improved rural roads.

The project supports the Government’s Western Region Development Strategy, which aims to improve the investment environment and living conditions in the area.

The project’s total cost is estimated at $1.66 billion, with ADB’s loan accounting for 18% of the total cost and the rest will be financed by domestic resources. The loan comes from ADB’s ordinary capital resources and carries a 25-year term, including a grace period of 5 years. Interest rate charge will be based on ADB’s LIBOR-based lending facility.

The Gansu Provincial Communications Department is the executing agency for the project, which is due for completion in 2011.

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