ADB loan to improve Indian power distribution network
Project seeks to provide uninterrupted and affordable electricity supply to northeastern state of Meghalaya
11 Nov 2020 | Michael Marray

The Asian Development Bank (ADB) has approved a US$132.8 million loan to improve power quality and upgrade the power distribution network in India’s northeastern state of Meghalaya.

Although Meghalaya has achieved 100% electrification, the state’s per capita electricity consumption is low compared to the national average and remote rural areas in the state suffer from frequent power interruptions.

Distribution networks are overloaded and substations in rural areas use outdated technology, resulting in high aggregate technical and commercial losses. The government of India and the state government of Meghalaya embarked on a joint initiative in 2015, called 24X7 Power for All Meghalaya, to provide uninterrupted, quality, reliable, and affordable power supply to all electricity consumers.         

“This project fully supports Meghalaya’s Power for All initiative in providing quality electricity 24 hours, seven days a week to households, industries, businesses, and the public," says ADB senior energy specialist for South Asia Jaimes Kolantharaj. "By modernizing and improving the distribution network, the project will improve the operational efficiency of distribution system and the financial sustainability of distribution business in the state. Improving access to electricity and creating economic opportunities in rural areas will help address poverty, promote rural development, and reduce inequality.”  

The project will construct 23 substations; renovate and modernize 45 substations, including the provision of control room equipment and protection systems; and install and upgrade 2,214 kilometres of distribution lines and associated facilities covering three out of the six circles in the state. It will replace antiquated electromechanical meters with smart meters, which will benefit about 180,000 households.

The loan will be supplemented by a US$2 million grant from ADB’s Japan Fund for Poverty Reduction that will finance mini-grids that will improve power quality and support income generation, especially for women and other socially disadvantaged groups, using renewable energy sources in three villages and three schools.

The project will help develop a distribution sector road map and a financial road map for the Meghalaya Power Distribution Corporation Limited (MePDCL). These road maps will strengthen the capacity of MePDCL to operate and manage the distribution networks.

In another deal in the Indian power sector, Japan Bank for International Cooperation on October 28 signed a 50 billion yen (US$476.4 million) loan agreement (of which JBIC’s portion is 30 billion yen) with NTPC Limited, India’s largest state-owned power generation company. 

The loan is extended under JBIC’s Growth Investment Facility and is co-financed with Sumitomo Mitsui Banking Corporation, Bank of Yokohama, San-In Godo Bank, Joyo Bank, and Nanto Bank, with JBIC providing guarantee for the co-financed portion. The loan is intended to provide NTPC with the necessary funds for solar power generation projects and installation of environmental equipment in India.

Coal-fired power still accounts for a large proportion of the country’s energy mix. India's government has been tightening environmental regulations on power plants and developing renewable energy projects in order to stabilize power supplies and reduce air pollution.