The bank for regional development, Asian Development Bank (ADB) has signed a loan agreement with Government of India worth USD 100 million (around Rs 730 crore) for modernization and upgradation of power distribution system of Bengaluru city, Karnataka. This sovereign ADB loan aims to enhance quality and reliability of electricity supply in Bengaluru city, and has been granted under Bengaluru Smart Energy Efficient Power Distribution Project. Besides this project, another ADB loan of US$ 90 million was earlier approved for BESCOM
Utilization of the US$ 100 million ADB Loan for Bengaluru City
The US$ 100 million ADB loan agreement was signed on 31st December 2020. The loan will cover conversion of 7,200 Km overhead distribution lines into underground cables. This shall help in reducing technical and commercial losses via distribution by about 30 percent. With this, an energy-efficient distribution network shall be built across Bengaluru.
Under the same ADB loan agreement, over 2,800 Km of fibre optical cables will be installed to strengthen communications networks in Bengaluru city. These fibre optical cables shall be used for smart metering systems, distribution automation system (DAS) in distribution grid, and other communication networks.
Apart from this, the ADB loan shall be utilized to install 1,700 automated ring main units adapted with a DAS. These shall be used to monitor and control the distribution line switchgears from the Control Centre.
Commenting on the signing of the ADB loan, Mr. Hoe Yun Jeong, Officer-in-Charge of ADB’s India Resident Mission 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”, as reported in article of Press Information Bureau by Ministry of Finance dated 4th January 2021.
ADB’s US$ 90 million Loan to BESCOM for Development of Bengaluru
Under Bengaluru Smart Energy Efficient Power Distribution Project, ABD will also grant USD 90 million loan to Bangalore Electricity Supply Company (BESCOM) which is a state-owned distribution utility. BESCOM is one of the five state-owned distribution utilities in Karnataka.
On 4th December 2020, ADB had approved this loan. ADB’s loan to BESCOM is without sovereign guarantee. This shall help BESCOM strengthen its operation and maintenance capacity of underground cabling, environment and social safeguards, financial management and commercial financing.
About ADB: It is a regional development bank, established in 1966 with headquarters in Metro Manila, Philippines, and has 31 field offices around the globe. ADB helps developing Asian countries meet their energy security needs & facilitate a transition to a low-carbon economy.
About BESCOM: Bangalore Electricity Supply Company Limited is responsible for power distribution in eight districts of Karnataka. BESCOM covers an area of 41,092 Sq. Km with a population of over 207 lakhs.