ADB Approves $148 Million Loan for Modernization of Sikkim’s Power Distribution

The project will deploy solar energy systems in 24 healthcare sub-centers

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The Asian Development Bank (ADB) has approved a $148.5 million loan to enhance, upgrade, and climate-proof the electricity distribution system in Sikkim and improve the power supply’s reliability, quality, and resilience.

The project aims to improve the livelihoods of at least 1,100 women, including self-help groups, producer groups, and individual businesses, through the installation of customized renewable energy systems and vocational skills training.

It will deploy solar energy systems and energy-efficient equipment in 24 primary healthcare sub-centers, enhancing rural healthcare facilities’ capacity to provide inpatient treatments, especially during winter.

“This project fully aligns with Sikkim’s Power for All initiative, guaranteeing uninterrupted, high-quality electricity access around the clock for households, industries, businesses, and the public. Moreover, it complements the Government of India’s Revamped Distribution Sector Scheme by bolstering the distribution network, thereby enhancing operational efficiency and financial viability of the distribution sector in the state,” stated ADB Principal Energy Specialist Jaimes Kolantharaj.

ADB said the project will support the efficient transfer and integration of renewable energy into the distribution system and improve electricity access in rural areas and businesses, thereby boosting economic opportunities, ensuring productivity, and improving living standards.

The initiative is expected to modernize Sikkim’s power distribution system by installing approximately 770 kilometers of climate-resilient medium-voltage underground and/or covered conductors.

Additionally, 580 kilometers of outdated and low-capacity bare conductors will be replaced to increase network capacity.

The project also involves upgrading 26 power substations with a supervisory control and data acquisition system, installing 15,000 units of public street lighting in remote areas, and conducting electricity conservation and safety awareness programs in 28 villages.

ADB will support the development of a financial sustainability strategy and a plan to establish Sikkim’s Power Department (PDS) as an independent entity to enhance the sector’s financial stability.

It will assist PDS in creating a power distribution master plan, integrating geographic information systems and distribution system modeling, and establishing a real-time monitoring control center for improved power management.

ADB recently raised ₹12.5 billion (~$150 million) through green bonds.

ADB has also financed several of India’s clean energy projects in the past. Last December, it loaned $200 million to enhance Uttarakhand’s electricity supply and enable the state’s transition to clean energy sources.

It also approved a loan of $250 million to strengthen India’s power sector. The funds would be used to enhance the financial performance of electricity distribution companies and enable an environment conducive to private sector investment.

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