New Delhi: The Asian Development Bank (ADB) will invest $750 million on power transmission systems that facilitate the bulk transfer of electricity from Chhattisgarh to areas of high demand in the North of India, including the National Capital Region.
The funds will be made available to state-run transmission utility Powergrid, the multilateral funding agency said in a statement, adding that the funding will be in the form of a $500 million sovereign-guaranteed loan and a $250 million non-sovereign corporate loan.
The ADB board of directors has approved loan financing for the national grid improvement project, which will allow the bulk transfer of electricity (3,000 MW) from independent power producers in Chhattisgarh to areas of high demand in the North of the country.
“This funding would provide an anchor transaction in the total project cost of $2.25 billion and serve as a catalyst for further engagement from commercial financiers in Powergrid’s transactions,” the statement said.
The project is due for completion in 2017.
Driven by robust growth, India’s demand for electricity has exceeded supply in recent years. Though generating capacity has been increasing over the years in the country, expansion of transmission networks has not kept pace.
Creating inter-regional transmission “corridors” will allow them to move surplus electricity to areas short of supply, the ADB said.
“Strengthening the inter-regional transmission network will promote open access to power supply, increase investment in both generation and distribution, help integrate the electricity market and encourage power trading and competitive electricity prices,” ADB’s South Asia Department Senior Energy Specialist Kaoru Ogino said.