ADB Approves ₹13.9 Billion Loan to Upgrade Bengaluru's Power Distribution System

In a significant development, the Asian Development Bank (ADB) has approved a loan of $190 million (~₹13.9 billion) to upgrade the existing power distribution system in the city of Bengaluru in Karnataka, according to a press release.

The financial aid will include $100 million (~₹7.36 billion) as a sovereign loan and $90 million (~₹6.62 billion) as a non-sovereign loan to Bangalore Electricity Supply Company Limited (BESCOM) for its ‘Bengaluru Smart Energy Efficient Power Distribution’ project. BESCOM is one of the five state-owned power distribution companies in the state.

The loan is expected to help the DISCOM in operation and maintenance (O&M) activities and financial management.

Speaking on the development, Principal Energy Specialist for South Asia, Teruhisa Oi, said, “Reliable and sustainable electricity distribution and service is an important aspect of India’s growth and development. We believe that this project will improve the efficient distribution and delivery of electricity supply to residents of Bengaluru and support the Government of India’s strategy of building an energy-efficient distribution network.”


Echoing similar sentiments, Mayank Choudhary, Principal Investment Specialist at ADB’s Private Sector Operations Department, said, “This feature is an innovative financing arrangement, the first of its kind combining public and private loans to a state-owned enterprise. This financing structure reduces BESCOM’s sovereign exposure while helping it raise resources for capital expenditure using a market-based approach.”

As per the press release, the project is expected to streamline the city’s whole power distribution process. The project will convert 7,200 km of overhead distribution lines to underground cables, with 2,800 km of fiber optic cabling. This move is expected to protect the distribution lines from natural hazards and, in the process, reduce the commercial losses by 30%. The fiber cabling used for the project will be used for smart metering systems, distribution automation system (DAS), and other communication networks. The project will also put in place 1,700 automated ring main units with DAS to monitor the distribution line switchgear.

Established in 1966, ADB now has 68 members, out of which 49 members are from the region.

Recently, ADB announced that it approved a $430 million (~₹31.64 billion) multi-tranche financing facility (MFF) to improve the reliability and quality of power supply in Uttar Pradesh. The funding will be utilized for the Uttar Pradesh Power Distribution Network Rehabilitation project, which will enhance the sustainability and efficiency of the electricity supply in the state.

Earlier, ADB announced that it had approved a $132.8 million (~₹9.77 billion) loan to modernize Meghalaya’s power distribution network. The loan will be utilized to support a joint initiative of the Meghalaya government and the Government of India called’ 24*7 Power for All Meghalaya’ that aims to provide continuous, reliable, and affordable power supply to all.

 

Image credit: Photo by James Wainscoat on Unsplash