India’s power transmission grid is to be expanded by an ambitious billion dollar project funded partly by the Asian Development Bank (ADB).
Power Grid Corporation of India Ltd (Powergrid) is to build a high voltage power transmission system to transmit electricity from hydropower plants in the north and northeast to demand centres in the north and west. The project will help the country meet rapidly rising electricity demand and improve electrification rates.
The project is estimated to cost $2.54 billion, with the ADB financing up to $1 billion through two loan tranches. Powergrid will invest $762 million in the project and raise the balance of funding from other financial institutions.
Electricity consumption in India is expected to rise by eight per cent per year in order to meet the government’s economic growth target of nine per cent, according to the ADB. Only 44 per cent of households have access to electricity and power shortages are a problem across much of the country.
The ADB will extend a $600 million loan to Powergrid with the possibility of a second $400 million tranche to be approved later in 2008.
“This loan will help the government of India optimize the power supply mix through greater use of indigenous hydropower resources and maximise energy efficiencies,” said Tomoyuki Kimura, Principal Energy Specialist at 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 MW,” 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 project is part of POWERGRID’s five-year, $13.75 billion investment plan.
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