ADB to provide $346 mn loan for power supply project in rural Maharashtra

The Asian Development Bank (ADB) and the Government of India on Monday signed a $346 million loan pact to help provide efficient and reliable power supply to rural agriculture customers in Maharashtra

The Asian Development Bank (ADB) and the Government of India on Monday signed a USD 346 million loan pact to help provide efficient and reliable power supply to rural agriculture customers in Maharashtra.

The signatories to the loan agreement for the Maharashtra Rural High Voltage Distribution System (HVDS) Expansion Program were Sameer Kumar Khare, Additional Secretary (Fund Bank and ADB), Department of Economic Affairs in the Ministry of Finance, on behalf of the Government of India, and Takeo Konishi, Country Director of ADB's India Resident Mission.

The program aims to provide efficient and reliable power to agricultural customers in Maharashtra's rural areas through adoption of HVDS that will help reduce distribution losses, and improve agricultural productivity and farmer incomes, Khare said after signing the loan agreement.

"The demand-driven program supports capacity building and awareness raising on HVDS and will also establish a complaint redressal mechanism for rural consumers," he added.

The program will be implemented until March 2022, by which time about 1.50,000 metered HVDS connections are expected, the ADB said in a release.

"Effective metering, billing and usage-based tariffs for customers served by HVDS network will set the stage for investments in energy efficient pumps, drip irrigation and could support improvements in subsidy management," said Konishi.

ADB will support awareness raising efforts on the benefits of HVDS compared to the traditional electricity distribution network as well as efficient use of electricity and water.

Improved awareness will help expand the HVDS network to cover agricultural customers beyond 2022 and mobilise commercial financing.

The loan will be under ADB's results-based lending (RBL) modality, where fund disbursements are linked to the achievement of agreed program results rather than to upfront expenditures, as is the case with traditional investment lending.

"This first ADB-financed RBL program in South Asia's energy sector will help in the early construction and installation of metered HVDS through the installation of about 46,800 kilometers of grid extension lines, construction and upgrading of distribution substations," the release said.

The program will also build institutional capacity of the Maharashtra State Electricity Distribution Company Limited (MSEDCL) on HVDS.

The loan will be accompanied by a USD 1 million technical assistance from ADB to demonstrate energy and water conservation efforts.