Washington: The World Bank has approved a $600-million loan to government-run power transmission company, Power Grid Corporation of India, to strengthen its electricity transmission system.
Announcing the loan backed by Government of India guarantee, the bank said in a statement, the Fourth Power System Development Project (PSDP IV) would aim to cut transmission losses and energy cost through further investments in its systems.
The project is part of the bank’s long term partnership with Power Grid, initiated when the firm was formed in 1989.
“Despite a booming economy, India’s growth potential is constrained by inadequate electricity services and limited power generation and supply infrastructure... The power sector has improved in recent years, albeit in an environment where demand for electricity continues to outstrip supply,” the bank said.
The bank has made three direct loans to Power Grid since 1993. During this period, the company has nearly tripled its transmission network, its assets have grown more than eight-fold to $7.3 billion and revenues have increased more than six times to over $1 billion, it said in a statement.
“India’s policy reforms in the power sector are beginning to pay off,” World Bank country director (India) Isabel Guerrero said. “The sector’s financial performance is improving and more and more villages are being electrified... This project, by strengthening transmission networks within and between regions, will enable more power to reach the people across the country” she added.
“The Bank’s partnership with Power Grid represents a sound and replicable model for engagement with middle income countries,“ World Bank Senior Energy Specialist and team leader of the project Pedro Sanchez said.
The project would finance the strengthening of five transmission schemes: East-West Transmission Corridor, Western Region System Strengthening Scheme II, Eastern Region System Strengthening Scheme I, Balia-Bhiwadi HVDC Bipole System, and North-West Transmission Corridor.
The loan, from the International Bank for Reconstruction and Development (IBRD), has a 20 year maturity which includes a 5-year grace period.