ADB loans $48m to Assam, India for power distribution system upgrades

It's the second tranche loan of the $300m financing aid for Assam approved by ADB.

The Asian Development Bank (ADB) and the Government of India today signed a $48 million loan to help Assam state continue its drive to improve access to efficient and reliable power.

This is the second tranche loan of the $300 million multi tranche-financing facility for the Assam Power Sector Investment Program that was approved by the ADB Board in July 2014. The project will help Assam to enhance the capacity and efficiency of its power distribution system to improve electricity services for end users. The first tranche loan of $50 million was signed in February 2015.

“Increased access to a reliable and modern power supply for remote communities can help meet growing demand. This loan will help strengthen the state’s distribution system, improve energy efficiency, and reduce technical and commercial losses,” said M. Teresa Kho, Country Director of ADB's India Resident Mission, who signed the loan agreement on behalf of ADB.

“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,” said Raj Kumar, Joint Secretary (Multilateral Institutions) in the Ministry of Finance, who signed the agreement for the Government of India. Z. Rahman Ahmed, Secretary (Power) Government of Assam, signed the loan agreement on behalf of the state government along with Puru Gupta, Managing Director, Assam Power Distribution Company Ltd. (APDCL).

The project, which is expected to be completed by December 2019, will help APDCL add substation capacity, expand and improve the medium-voltage network, reduce system losses by 3%, and enhance energy efficiency through the renovation and modernization of existing 33/11 kV substations. Part of the loan will be used to strengthen the institutional capacity of APDCL through setting up independent meter testing laboratories and load dispatch centers and installing a centralized uniform billing system for 1.2 million customers.

The loan of $48 million from ADB’s ordinary capital resources makes up 80% of the total project cost of almost $60 million, with the Government of Assam providing counterpart finance of $12 million. 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.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members – 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.