India signs $100 million loan with ADB to modernise power distribution system in Bengaluru
This will help Bengaluru in providing quality and reliable power supply to residents
In order to modernize and upgrade the power distribution system in Bengaluru city, India has signed a $100 million loan with the Asian Development Bank.
Beside the $100 million loan, ADB will provide a $90 million without sovereign guarantee loan for the project to Bangalore Electricity Supply Company Limited (BESCOM), one of five state-owned distribution utilities in Karnataka.
After signing the loan agreement on December 31, Dr.C S Mohapatra, additional secretary in the Department of Economic Affairs said conversion of overhead distribution lines into underground cables will help build an energy-efficient distribution network, reduce technical and commercial losses and minimize electricity outage resulting from natural hazards such as cyclones and external disturbances to overhead lines.
While Hoe Yun Jeong, Officer-in-Charge of ADB’s India Resident Mission, who signed for ADB said the project demonstrates an innovative financing arrangement, the first of its kind for ADB, by combining sovereign and non-sovereign loans for a state government-owned enterprise.
This is intended to significantly reduce the sovereign exposure and help BESCOM move towards a market-based approach for raising funds for capital expenditure.
In parallel to underground distribution cables, over 2,800 km of fibre optical cables will be installed to strengthen communication networks. Moving about 7,200 km of distribution lines underground will help reduce technical and commercial losses by about 30%.
The fibre optical cables will be used for smart metering systems, distribution automation system (DAS) in the distribution grid, and other communication networks. The project will install 1,700 automated ring main units adapted with a DAS to monitor and control the distribution line switchgears from the control centre.
The loan will strengthen the capacity of BESCOM in operation and maintenance of underground cabling, environment and social safeguards, financial management and commercial financing. Improved financial management capability will help BESCOM access the domestic and international commercial financing market.
Established in 1966, ADB is owned by 68 members—49 from the region.