ADB gives $346 mn loan for power sector in rural Maharashtra

It will support the state government's HVDS programme

Asian Development Bank, Indian government, Reliable power connection, Rural areas of Maharashtra, High voltage distribution system, Grid-connected rural agricultural, Results-based lending modality, Fund disbursements, South Asia's energy sector, Installation of metered HVDS, Distribution substations, Maharashtra State Electricity Distribution Company, MSEDCL, HVDS, Maharashtra government, Maharashtra Energy Department, Maharashtra Rural Connectivity Improvement Project, Maharashtra Agribusiness Network Project, Private sector development, Water conservation

The Asian Development Bank (ADB) has approved $346 million (around Rs 2,616 crore) loan to the Indian government to provide reliable power connection in rural areas of Maharashtra.

The loan will support the state government's high voltage distribution system (HVDS) programme for new grid-connected rural agricultural customers across the state.

The loan will be under ADB's results-based lending (RBL) modality, where fund disbursements are linked to the achievement of agreed programme results rather than to upfront expenditures, as is the case with traditional investment lending. This first ADB-financed RBL programme in South Asia's energy sector will help in early construction and installation of metered HVDS through installation of about 46,800 km of 11 kV grid extension lines, construction and upgrading of 121 33/11 kV distribution substations.

The programme will also build institutional capacity in the Maharashtra State Electricity Distribution Company (MSEDCL) on HVDS. The Maharashtra government and MSEDCL will arrange for counterpart funding of $357.1 million equivalent toward the $703.1 million total cost of the project.

The project will be implemented by the Maharashtra Energy Department and MSEDCL. The loan supports the first phase of the state's HVDS programme.

The programme complements ADB's Maharashtra Rural Connectivity Improvement Project and Maharashtra Agribusiness Network Project to promote economic growth and private sector development in rural Maharashtra. This loan will be accompanied by $1 million technical assistance from ADB to demonstrate energy and water conservation efforts.

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