The Asian Development Bank (ADB) has approved a $132.2m loan for electricity system upgrades to the Indian state of Bihar.

The Bihar Power System Improvement Project aims to alleviate system bottlenecks and reduce technical and commercial losses in the state.

Installation of new transmission lines, and renovation and modernisation of transmission and distribution facilities will be carried out with the help of the loan.

ADB’s South Asia Department senior energy specialist Andrew Jeffries said the power consumption in the state is low with electrification rates less than half the country’s average, an unreliable and unstable transmission and distribution system and system losses exceeding 40%.

“Currently only about 60% of Indian households have access to electricity and adequate supply is essential for sustained economic growth and poverty reduction,” said Jeffries.

The 25-year term loan accounts for 86% of the total project cost amounting to $154m, with the Government of Bihar financing the remaining $21.7m.

The project is scheduled for completion in December 2015.