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India inks $826 mn loan agreement with ADB

Press Trust of India  |  New Delhi 

The government today signed three loan agreements totalling $826 million with multilateral funding agency Asian Development Bank (ADB) to help the country efficiently transfer electricity from surplus regions to power-deficit regions.

Of this, $500 million sovereign-guaranteed loan and a $250 million non-sovereign corporate loan will establish a 1,300-plus kilometre interregional transmission link.

This is to allow bulk transfer of electricity from independent power producers in the western state of Chhattisgarh to areas of high demand in the north, a Finance Ministry statement said.

Besides, the third loan of $76 million is for connecting the western grid region to the union territories of Daman and Diu and Dadra and Nagar Haveli.

"This is a pioneering initiative to club a non-sovereign loan of $250 million with a sovereign loan of $500 million in one financing package," Joint Secretary in the Ministry of Finance Venu Rajamony said.

Rajamony added that this loan has set a benchmark for future commercial lending not only to Power Grid but all Central Public Sector Undertakings.

Speaking on the occasion, ADB representative Rana Hasan said: "The project will strengthen the national power grid through achieving enhanced transmission capacity and reliability of supply".

The sovereign loans will have 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.

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First Published: Fri, March 30 2012. 20:22 IST