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ADB lends $175 m to Power Grid Corporation

According to reports, the Asian Development Bank (ADB) has extended a $175 million loan to the Power Grid Corporation of India Ltd. An official statement stated that this will be “to support construction of high voltage transmission systems to evacuate power generated from new mega solar parks to the interstate grid, and improve reliability of the national grid system.”

The project will improve the capacity and efficiency of interstate transmission networks, particularly in transmitting the electricity generated from the new solar parks to the national grid. Apart from the evacuation of 2,500 megawatts (MW) of power from solar parks in Bhadla, Rajastha, and 700 MW from Banaskantha, Gujarat, PGCIL is also including two additional sub-projects that will increase solar power generation by 4.2 gigawatt and lessen carbon emissions by over 7 million tons every year.

In addition to the ADB loan of $175 million, the project includes $50 million co-finance from the Clean Technology Fund (CTF) – a $5.8 billion component of the Climate Investment Funds aimed at providing developing countries resources to expand efforts in utilising low carbon technologies and transitioning to clean, renewable energy sources.

PGCIL will make an equity contribution of $135 million equivalent to support the total project cost of $ 450 million. The $175 million loan will be from ADB’s ordinary capital resources (OCR) and will have a 20-year term, an annual interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility. The $50 million CTF loan financing will come with a 40 year term.

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