ADB’s loan will be used to upgrade and modernise power distribution systems. Credit: Matthew Henry on Unsplash.

The Asian Development Bank (ADB) has agreed to provide a combined sovereign and non-sovereign loan amounting to $190m for the upgrade and modernisation of power distribution system in Bengaluru city in the Indian state of Karnataka.

ADB will provide a sovereign loan of $100m for the Bengaluru Smart Energy Efficient Power Distribution Project and $90m to Bangalore Electricity Supply Company (BESCOM) without sovereign guarantee loan.

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ADB South Asia principal energy specialist Teruhisa Oi said: “Reliable and sustainable electricity distribution and service is an important aspect of India’s growth and development

“We believe that this project will improve the efficient distribution and delivery of electricity supply to residents of Bengaluru and support the Government of India’s strategy of building an energy-efficient distribution network.”

Under the project, 7,200km of overhead distribution lines will be converted to underground cables and laid parallelly along with the 2,800km of fibre optic communication cables.

The fibre optic cables will be used for smart metering systems, distribution automation system (DAS) in the distribution grid, and other communication networks.

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Additionally, the project will involve the installation of 1,700 automated ring main units integrated with DAS to monitor and control the distribution line switchgears from the control centre.

The loan awarded to BESCOM, one of five state-owned distribution utilities in the state, will be used to boost its utility’s operation and maintenance capabilities, as well as the environment and social safeguards.

The loan will also help BESCOM’s financial management and commercial financing abilities.

ADB Private Sector Operations Department principal investment specialist Mayank Choudhary said: “This features an innovative financing arrangement, the first of its kind for ADB, combining public and private sector loans to a state government-owned enterprise.

“This financing structure reduces BESCOM’s sovereign exposure while helping it raise resources for capital expenditure using a market-based approach.”

Last month, ADB agreed to support the Electricity Grid Modernization Project in Nepal by approving a concessional loan of $156m.