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ADB Approves a first of its kind $190 Million Loan for Bengaluru Smart Energy Efficient Power Distribution Project 

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ADB approves $190 million loan to upgrade power distribution in BengaluruOn December 4, 2020 The Asian Development Bank (ADB) approved a  $190 million(over Rs 1,400 crore) loan for the Bengaluru Smart Energy Efficient Power Distribution Project.

The loan amount includes a $100 million sovereign loan(public sector) and a $90 million without sovereign guarantee loan or  non sovereign loan(private sector) to Bangalore Electricity Supply Company Limited (BESCOM), one of five state-owned distribution utilities and the largest in Karnataka.

  • This is the first time that ADB offers a combination of sovereign and non sovereign loans to  a state government-owned enterprise.
  • ADB for the 1st time deploys this combination on a pilot basis in India.

Objective of the Loan

To modernize and upgrade the power distribution system in Bengaluru, Karnataka.

About the Financing Structure

The financing structure minimises the sovereign exposure of BESCOM, while at the same time helps it to increase the resources for capital expenditure using a market-based approach.

About the Project:

Convert Overhead Distribution Lines to Underground Cables

i.The project converts 7,200 kilometers (km) of overhead distribution lines to underground cables along with a parallel installation of 2,800 km of fiber optic communication cables.

  • About 30% of the technical and commercial losses due to natural hazards and interference will be reduced on moving the distribution lines underground.

ii.The fiber optic cables will be used for smart metering systems, Distribution Automation System (DAS) in the distribution grid, and other communication networks.

Installation of 1,700 Automated RMUs Adapted with a DAS 

In order to monitor and control the distribution line switchgears from the control center, the project will install  1,700 automated Ring Main Units(RMUs) that are adapted with a DAS

Benefits

i.This project will improve the efficient distribution and delivery of electricity supply to Bengaluru.

ii.It supports the strategy of the Government of India to create an energy efficient distribution network.

iii.The loan reinforces BESCOM’s capacity in operation and maintenance, environment and social safeguards, etc.,

Gist about Sovereign & Non Sovereign Loan:
Sovereign Loan:

i.Sovereign loan or debt means debt incurred by a government.

ii.It is often made by a financial institution to a government, often to a developing or emerging nation.

Non- Sovereign Loan:

i.Non-sovereign loans are not guaranteed by the national government.

ii.These loans are generally issued to finance schools, hospitals, highways, bridges, etc.

iii.This loan was issued to fund local budgets, or sometimes to fund projects such as the construction of railroads or airports.

Recent Related News:

On 28th September 2020, The Asian Development Bank (ADB) signed an agreement to invest 15 million USD (Rs.109.9 crore) in Avaada Energy Private Limited(AEPL) to support the company to scale the photovoltaic solar energy generation capacity in India.

About Asian Development Bank (ADB):

Headquarters– Mandaluyong, Manila, Philippines
President– Masatsugu Asakawa
Membership– 68 countries(Including India)
Formed– 1966