ADB's to provide $48 mn loan to help Assam improve power distribution

New Delhi: Asian Development Bank will provide the second tranche loan of USD 48 million to Assam to help the state expanding and upgrading its power distribution system.

This is the second tranche loan of the USD 300 million multi-tranche financing facility for the Assam Power Sector Investment Programme that was approved by the ADB Board in July 2014, Finance Ministry said in a statement today.

The project will help Assam to enhance capacity and efficiency of its power distribution system to improve electricity service to end users, it said.

An agreement regarding the second tranche was signed between Asian Development Bank (ADB) and the Union Government yesterday to help Assam continue its drive to improve access to efficient and reliable power, it added.

In the first tranche, ADB had provided loan of USD 50 million in February last year.

"Increased access to reliable and modern power supply for remote communities can help meet growing demand. This loan will help strengthen Assam's distribution system, improve energy efficiency and reduce technical and commercial losses," said M Teresa Kho, Country Director, ADB India Resident Mission.

The agreement was signed between Kho, Finance Ministry Joint Secretary Raj Kumar, Assam Power Secretary Z Rahman Ahmed along with Assam Power Distribution Company Ltd (APDCL) MD P Gupta.

"Given that a sustainable power supply is critical for facilitating growth and creating employment opportunities, this project will help Assam attract investment and tap its economic potential, in addition to reducing power outages," Kumar said.

The project, which is expected to be completed by December 2019 will help APDCL add an additional substation capacity, expand and improve medium voltage network.

It will also reduce system losses by 3 per cent and enhance energy efficiency through renovation and modernisation of existing 33/11 kV substations.

Part of the loan will be used to strengthen institutional capacity of APDCL through setting up independent meter testing laboratories, load dispatch centers and installing centralized uniform billing system to 1.2 million customers.

The loan has a 25-year term, including a five-year grace period with an annual interest rate determined in accordance with ADB's LIBOR-based lending facility.