India, AIIB Sign ₹21.9 Billion Loan Deal to Strengthen Power Transmission in Assam

The project aims to improve the reliability, capacity, and security of the transmission network

February 25, 2021


The Government of India and the Asian Infrastructure Investment Bank (AIIB) have signed a loan agreement for $304 million (~₹21.9 billion) to develop the ‘Assam Intra-State Transmission System Enhancement’ project.

The project aims to improve the reliability, capacity, and security of the power transmission network in the northeastern state of Assam.

The project is estimated to cost $365 million (~₹26.38 billion), out of which $304 million (~₹21.9 billion) will be financed by the AIIB. The Assam government will provide $61 million (~₹4.4 billion).

Ten transmission substations will be developed as part of the project. It will involve laying transmission lines with the associated infrastructure, upgrading 15 existing substations and transmission lines, and providing technical assistance to support project implementation.

The project is expected to strengthen the existing transmission network in Assam by augmenting it with new networks and achieving round-the-clock electricity in the state, which would help the state achieve long-term power sustainability.

Baldeo Purushartha, Joint Secretary, Department of Economic Affairs- Ministry of Finance, said that the project’s implementation would improve the state’s transmission network and reduce transmission losses.

Currently, Assam has huge power and peak demand deficit, mainly because of the congestion in the transmission network. Assam Electricity Grid Corporation Limited is the sole transmission utility in the state, and it operates 66 substations with 6,882 MVA capacity. Its network is currently spread across 5,701 circuit kilometers of transmission lines.

According to data from the Central Electricity Authority (CEA), the northeastern states experienced the worst power and peak supply deficits at 3.1% and 5.1% during April and September 2020.

In December 2020, the cabinet committee on economic affairs approved the ‘Revised Cost Estimate’ for the North Eastern Region Power System Improvement Project (NERPSIP) with an estimated cost of ₹67 billion (~$910 million). The approval is a significant step toward strengthening the intra-state transmission and distribution systems in the region.

Asian Development Bank (ADB) has been an active lender to power transmission projects in India. It had approved a $451 million (~₹31.77 billion) loan to Tamil Nadu for power transmission between the southern part of the Chennai-Kanyakumari Industrial Corridor and the northern regions where there is higher power demand. ADB has also provided a $346 million (~₹26.92 billion) loan to strengthen power transmission to rural agriculture customers in Maharashtra and a $132.8 million loan to modernize the power distribution network in Meghalaya.

World Bank has earlier provided $310 million loan assistance for Jharkhand for reinforcing their power distribution network.