India, ADB sign loan agreements for power projects
Indian has signed loan agreements with Asian Development Bank (ADB) to finance some of its ongoing power projects in Assam, Gujarat and Madhya Pradesh.
US$50 million for Assam project
ADB will lend US$50 million to support electricity transmission and distribution capacity in Assam. This is the third and last tranche of total US$320.6 million MFF, out of which loan assistance from ADB is US$200 million and financing by Assam government is US$120.6 million. Tranches one and two are already under implementation.
The programme will help ASEB (Assam State Electricity Board) add an additional 430 MVA substation capacity and reduce system losses by 4 per cent. Part of the loan will be used to enhance energy efficiency through renovation and modernization of existing 33/11 kV substations, the introduction of high voltage distribution systems, and conversion to aerial bunched cables for some high voltage and low voltage lines in the urban areas. The programme is expected to benefit around 1 million households, businesses, hospitals and schools in the state.
The loan has a 20-year term, including a five-year grace period with an annual interest rate determined in accordance with ADB`s LIBOR-based lending facility. The project is expected to be completed by 30 June, 2014.
Gujarat Solar project to get US$100 million
Gujarat will be using the US$100 million ADB loan for its solar power transmission system that will distribute 500 megawatts of solar power from the Charanka Solar Park in Gujarat.
This is a LIBOR-based loan from ADB’s Ordinary Capital Resources and has a term of 25 years including 5 years of grace period.
MP to get US$200 million
ADB will give US$200 million loan to support the provision of reliable and 24-hour electricity to rural households in Madhya Pradesh. This is the second and final tranche of ADB loan, which will support the second phase of the state’s ongoing US$1.1 billion feeder separation program to improve power distribution infrastructure in 32 districts.
At present the overuse of electricity for irrigation provided through a single distribution feeder leaves households short of power for much of the day. Ageing and overloaded distribution lines and transformers also result in large transmission losses. ADB’s loan funds will establish separate power feeders for households and agricultural use, install high-voltage distribution systems, provide new power connections and improve the financial sustainability of the distribution companies.
ADB is also providing technical assistance of US$1 million to train women entrepreneurs on how to take advantage of new economic opportunities that will emerge with an uninterrupted power supply in their rural communities. Another technical assistance of US$600,000 is under preparation for training the Meter Readers.
ADB’s second tranche loan has a 25-year term with a grace period of five years and interest determined in accordance with ADB’s LIBOR-based lending facility. The technical assistance grant comes from ADB’s concessional Technical Assistance Special Fund. The government of Madhya Pradesh and three state distribution companies will provide counterpart funds of US$156 million for the US$556 million investment program. The program will be carried out by the three distribution companies and is expected to be completed by February 2015.