ADB, India sign $100 million loan agreement to modernise Bengaluru’s power distribution system

The Asian Development Bank (ADB) and the Government of India on 31st December 2020 signed a $100 million loan to modernise and upgrade the power distribution system in Bengaluru city in the state of Karnataka. Besides the $100 million sovereign loan, ADB will provide a $90 million without-sovereign-guarantee loan for the project to the state-owned Bangalore Electricity Supply Company Limited (BESCOM).

The loan will strengthen the capacity of BESCOM in the operation and maintenance of underground cabling, environmental and social safeguards, financial management and commercial financing, stated a press release. In parallel to underground distribution cables, over 2,800 km of fibre optical cables will be installed. Moving about 7,200 km of distribution lines underground is expected to reduce technical and commercial losses by about 30%. The fibre optical cables will be used for smart metering systems, distribution automation system (DAS) in the distribution grid, and other communication networks. The project will install 1,700 automated ring main units adapted with a DAS to monitor and control the distribution line switchgears from the control centre. It is anticipated that the project will enhance the quality and reliability of electricity supply.

The signatories to the Bengaluru Smart Energy Efficient Power Distribution Project were Dr. C. S. Mohapatra, Additional Secretary, Department of Economic Affairs in the Ministry of Finance and Mr. Hoe Yun Jeong, Officer-in-Charge of ADB’s India Resident Mission.

After signing the loan agreement, Dr. Mohapatra stated that conversion of overhead distribution lines into underground cables will help build an energy-efficient distribution network, reduce technical and commercial losses and minimize electricity outage resulting from natural hazards such as cyclones and external disturbances to overhead lines.

Mr. Jeong said that the project demonstrates an innovative financing arrangement, the first of its kind for ADB, by combining sovereign and non-sovereign loans for a state government-owned enterprise. This is intended to significantly reduce the sovereign exposure and help BESCOM move towards a market-based approach for raising funds for capital expenditure.

(Published from PIB)