ADB to lend $500m to India for power transmission project

It is expected to be completed by December 2020.

The Asian Development Bank (ADB) and the Government of India today a $500 million loan to help improve large-scale power transmission from the northern to the southern regions, while helping integrate renewable energy in the country’s power system.

The agreement was signed by Leonardus Boenawan Sondjaja, Deputy Country Director of ADB’s India Resident Mission; Raj Kumar, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, Ministry of Finance, Government of India; and I. S. Jha, Chairman and Managing Director of Power Grid Corporation of India Limited (POWERGRID).

“Expansion of inter-regional connectivity enables bulk power transfer to the southern region which has, at times, been affected by power shortages. This loan will also help strengthen the transmission system to accommodate renewable energy-generation capacity,” said Sondjaja.

“The program will facilitate power transfers among states and regions, and stabilize electricity supply and improve the quality of power. It will also help connect renewable energy to interstate power system and enhance energy security in India,” said Kumar.

The project, which is expected to be completed by December 2020, will help build 800 kilovolt (kV) and 320 kV High Voltage Direct Current (HVDC) converter stations and 765 kV power transmission systems in India. It will also help POWERGRID add 6,000 MVA transmission capacity between Raigarh in Chhattisgarh and Pugalur in Tamil Nadu; 2,000 MVA transmission capacity between Pugalur in Tamil Nadu and North Trichur in Kerala; and 3,000 MVA transmission capacity to accommodate renewable energy flows via Bikaner in Rajasthan.

The $500 million loan from ADB’s ordinary capital resources will make up around 19% of the $2.581 billion total project cost, with POWERGRID providing counterpart financing of $2.081 billion. 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.