AfDB Approves Loan for Modernization of Electricity Distribution System in Karnataka

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The Asian Development Bank (ADB) has agreed to provide a sovereign and non-sovereign loan in the amount of $ 190 million for the upgrade and modernization of the electricity distribution system of the city of Bengaluru in the Indian state of Karnataka.

The AfDB will provide a sovereign loan of $ 100 million for the Bengaluru energy efficient and energy-smart electricity distribution project and $ 90 million to the Bangalore Electricity Supply Company (BESCOM) without a sovereign guarantee loan.

Teruhisa Oi, AfDB Senior Energy Specialist in South Asia, said: “Reliable and sustainable electricity distribution and service is an important aspect of India’s growth and development.

“We believe this project will improve the efficient distribution and delivery of electricity supply to residents of Bangalore and support the Indian government’s strategy of building an energy efficient distribution network. ”

As part of the project, 7,200 km of overhead distribution lines will be converted into underground cables and laid in parallel with 2,800 km of fiber-optic communication cables.

Fiber optic cables will be used for smart metering systems, distribution automation system (DAS) in distribution network and other communication networks.

In addition, the project will include the installation of 1,700 main automated loop units integrated with the DAS to monitor and control the distribution equipment of the distribution lines from the control center.

The loan granted to BESCOM, one of the state’s five public distribution services, will be used to strengthen the operating and maintenance capacities of its public service, as well as environmental and social guarantees.

The loan will also help BESCOM’s financial management and trade finance capacities.

Mayank Choudhary, Senior Investment Specialist in the AfDB’s Private Sector Operations Department, said: “This presents an innovative financing arrangement, the first of its kind for the AfDB, combining public and private sector loans to a public enterprise. .

“This funding structure reduces BESCOM’s sovereign exposure while helping it mobilize resources for capital spending using a market-based approach.

Last month, the AfDB agreed to support Nepal’s power grid modernization project by approving a concessional loan of $ 156 million.

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