India and Asian Development Bank recently signed a $350-million loan for selective transmission and distribution system improvements critical for meeting the growing demand of power in Madhya Pradesh. The project would carry out physical upgrades to increase capacity and deliver power more efficiently.
It will fund about 1,800 ckm of transmission lines and more than 3,100 ckm of distribution lines, as well as building or upgrading transmission and distribution substations. The loan would help improve reliability of electricity supply in Madhya Pradesh and boost efforts to provide good quality power 24 hours a day, an official release from ADB noted.
Despite impressive network gains in recent years, demand for power in Madhya Pradesh is outstripping supply, and the quality and reliability of electricity – especially in rural areas – needs further improvements. The project would help increase capacity and operational efficiency in the electricity transmission and distribution system in Madhya Pradesh.
The project will build on previous ADB investments in the state’s power sector (including transmission and distribution assets) totaling more than $1.3 billion since 2001. Along with ADB’s loan from ordinary capital resources, the Government of India will provide $150 million for a total investment cost of $500 million. The project will run for about four and a half years with an estimated completion date of December 2018.
Madhya Pradesh, whose economy is growing at a quicker rate than the national average, is expected to see its demand for electricity rise by about 11 per cent a year between fiscal years 2013 and 2017, resulting in a potential transmission and distribution capacity gap of about 20 per cent. The mismatch between supply and demand has caused regular load shedding in the past, and currently only about two-thirds of all households are connected to the system.