ADB to Finance More Transmission Network Components with Co-Financing from AIIB
The Asian Development Bank (ADB) has increased its investment in Indian grid-infrastructure development by agreeing to fund additional power transmission network components with co-financing from the Asian Infrastructure Investment Bank (AIIB).
According to an ADB release, these new transmission network components will complement and further connect the Green Energy Corridor and Grid Strengthening project in India. The corridor is a transmission network envisioned to connect renewable energy-rich states to states that lack renewable energy generation potential.
The ADB financing approved for the project includes a $500 million government-backed loan and a further $500 million in non-sovereign lending to Power Grid Corporation of India Limited (PGCIL).
The new funding will enable the project to deliver energy to more provinces in India by expanding it to include 400 kilovolt (KV) transmission components in Tamil Nadu that will connect with the long‑distance grid systems financed by ADB in Pugalur.
ADB will also provide $50 million in savings from the earlier loans while AIIB’s Board of Directors has approved co-financing $100 million for the new project component, which has a total cost of $303.5 million. PGCIL will finance the remaining cost
To support the project in its initial stages, ADB’s Board of Directors in December 2015 initially approved two loans to build and upgrade inter-regional grid systems between the western and southern regions, as well as high voltage transmission lines and substations in the northern region.
The modern transmission system is expected to improve the ease of supplying power from renewable energy sources.
“We are pleased that this first AIIB co-financed project in India will bring clean energy to more people and help the country achieve its ambitious renewable energy targets,” said Priyantha Wijayatunga, director of ADB’s Energy Division in its South Asia department. “We look forward to broadening our partnership with AIIB in the coming years.”
For the transmission project, ADB and AIIB will administer their loans in parallel, and collaborate on the basis of the co-financing arrangement.
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Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.