ADB to help India bring electric power to all

Apr 1, 2008 - Xinhua

With support from the Asian Development Bank (ADB), India's national power grid operator will expand the country's power transmission grid and link stable energy supplies to all areas suffering shortages, ADB said on Tuesday.

ADB is extending a 600 million-U.S. dollar loan to Power Grid Corporation of India Ltd. in a multitranche financing facility to fund construction of a high-voltage power transmission system, the multilateral development bank said in a press release.

The system will transmit clean and abundant hydropower generated in the Northern and the Northeastern regions to demand centers in the Western region and within the Northern regions, ADB said.

The total cost of the ambitious project is estimated at 2.54 billion dollars. In addition to this 600 million-dollar loan, a potential second ADB loan of 400 million dollars is expected to be reviewed for approval later this year, the lender said.

Power Grid Corporation of India Ltd. will invest 762 million dollars and raise the balance of funding from other financial institutions.

To meet the Indian government's average annual economic growth target of nine percent, electricity consumption is expected to rise by an annual eight percent, according to ADB.

While more than 80 percent of villages already have electricity, only 44 percent of total households have access to it, and in the rural areas, only 33 percent of households have access to electricity. Except for the Eastern and Northeastern regions, the rest of the country faces power shortages in the range of 300 to 6, 000 megawatts, making it crucial to develop inter-regional power transmission links.

"This loan will help the Government of India optimize the power supply mix through greater use of indigenous hydropower resources and maximize energy efficiencies," said Tomoyuki Kimura, Principal Energy Specialist of ADB's South Asia Department.

"Access to electricity is a key driver of economic growth and poverty reduction. The government's five-year plan targets providing electricity to all households at an affordable price by 2012, which will require additional generating capacity of 78,600 megawatts," Kimura said.

As natural energy resources are unevenly distributed and often located far from the load centers, additional generation capacity will require development of the national power grid to ensure reliable and secure delivery of power, the specialist added.

The ADB-financed investment program will be part of Power Grid' s five-year, 13.75 billion-dollar investment plan. The program will increase transmission capacity by 4,500 megawatts to help develop clean energy sources in the Northeastern and Northern regions.