India and ADB sign US$132 million loan agreement
India has signed a US$132 million loan agreement with Asian Development Bank (ADB) today signed to strengthen Bihar’s power sector.
The project is expected to be completed by December 31, 2015. It will provide/transmit additional 472,579 megawatt-hours (MWh) to consumers annually by the end of 2015 and reduce system losses by 3% by 2016 in the seven districts of Bihar.
The major portion of the ADB loan (US$130.3 million) will be used to finance infrastructure such as transmission lines. The remaining (US$1.9 million) will be used for strengthening the internal capacity of the Bihar State Electricity Board (BSEB). The loan will be used to install new transmission lines and to renovate and modernize transmission and distribution facilities to improve the quality and reliability of the state’s electricity supply network. ADB will also provide a technical assistance grant of US$300,000 for training and other capacity development to improve project and financial management in BSEB. It will assist BSEB with project implementation and construction supervision, including training in the maintenance and operation of high-voltage distribution systems (HVDS).
Speaking on the occasion, Rajamony, Joint Secretary, Department of Economic Affairs, Ministry of Finance said that the ADB project will be the first ever loan to be extended by a multilateral development bank for strengthening Bihar’s power sector. He said that it will help to strengthen the State’s transmission and distribution system and reduce technical and commercial losses. Given that a reliable power supply is critical for facilitating growth and creating employment opportunities, this project will help Bihar in attracting investment and tapping its economic potential in addition to reducing power outages, Rajamony added.
Prodyut Dutt, Officer-in-Charge, ADB’s India Resident Mission said that ADB’s development partnership with Bihar has strengthened significantly since 2008 when the Bihar State Highways-I (US$420 million) was approved. Given the strong implementation performance of that loan, the second State Highways loan ($300 million) was approved in 2010. Going forward, ADB will process an urban development loan for Bihar in 2011 and the second Power Improvement Project in 2014 which will further deepen ADB’s partnership with the State, he said.