ADB Signed $100 Million Loan for Bengaluru's Power Distribution

The Asian Development Bank (ADB) and the Central government have signed a $100 million loan to modernise and upgrade the power distribution system to enhance the quality and reliability of electricity supply in Bengaluru.

The signatories to the Bengaluru Smart Energy Efficient Power Distribution Project are C. S. Mohapatra, Additional Secretary, Department of Economic Affairs in the Ministry of Finance, who signed on behalf of the Government of India, and Hoe Yun Jeong, Official in charge of ADB's India Resident Mission, who signed on behalf of ADB.

Beside, the $100 million sovereign loan, ADB would provide a $90 million without sovereign guarantee loan for the project to Bangalore Electricity Supply Company Limited (BESCOM), one of five state-owned distribution utilities in Karnataka.

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

ADB's Hoe Yun Jeong said 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.

In parallel to underground distribution cables, more than 2,800 km of fibre optical cables would be installed to strengthen the communication network. Moving about 7,200 km of distribution lines underground would help reduce technical and commercial losses by nearly 30 per cent. The fibre optical cables would be used for smart metering systems, distribution automation system (DAS) in the distribution grid, and other communication networks.

The project would install 1,700 automated ring main units adapted with a DAS to monitor and control the distribution line switchgears from the control centre.