The Asian Development Bank (ADB) and the Indian government have signed a $100 million loan agreement to modernize and upgrade the power distribution system in the Bengaluru city of Karnataka.
The upgrade will be done under the Bengaluru Smart Energy Efficient Power Distribution Project to enhance the quality and reliability of the electricity supply in Bengaluru.
Besides the $100 million sovereign loan, ADB will provide a $90 million without a sovereign guarantee loan for the project to Bangalore Electricity Supply Company Limited (BESCOM), one of the five state-owned distribution utilities in Karnataka.
As part of the project, overhead distribution lines will be converted into underground cables to reduce technical and commercial losses and minimize electricity outages resulting from natural hazards such as cyclones and external disturbances to overhead lines.
Moving about 7,200 km of distribution lines underground will reduce technical and commercial losses by about 30%.
In parallel to underground distribution cables, over 2,800 km of fibre optical cables will be installed to strengthen the communication network. 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.
“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,” said Hoe Yun Jeong, Officer-in-Charge of ADB’s India Resident Mission.
The loan will strengthen the capacity of BESCOM in operation and maintenance of underground cabling, environment and social safeguards, financial management and commercial financing. Improved financial management capability will help BESCOM access the domestic and international commercial financing market.
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