India's Madhya Pradesh to Better Meet Power Needs with $350 Million ADB Loan

ADB's $350 million loan will fund about 1,800 circuit kilometers of transmission lines and more than 3,100 circuit kilometers of distribution lines to bring more power to Madhya Pradesh.

MANILA, PHILIPPINES – The Asian Development Bank (ADB) has approved a $350 million loan for power asset upgrades that will allow the Indian state of Madhya Pradesh to meet booming consumer demand for power.

“The state has made impressive network gains in recent years but demand is outstripping supply, and the quality of electricity needs further improvements, especially in rural areas,” said Herath Gunatilake, Lead Energy Economist in ADB's South Asia Department. “Our assistance for transmission and distribution improvements will help Madhya Pradesh’s efforts to provide good quality power, 24 hours a day.”

Madhya Pradesh, whose economy is growing at a quicker rate than the national average, is expected to see its demand for electricity rise by about 11% a year between fiscal years 2013 to 2017, resulting in a potential transmission and distribution capacity gap of about 20%. The mismatch between supply and demand has caused regular load shedding in the past, and currently only about two-thirds of all households are connected to the system.

The Madhya Pradesh Power Transmission and Distribution System Improvement Project will carry out physical upgrades to increase capacity and deliver power more efficiently. It will fund about 1,800 circuit kilometers of transmission lines and more than 3,100 circuit kilometers of distribution lines, as well as building or upgrading transmission and distribution substations.

Training and other support will be given to staff of the Madhya Pradesh Power Transmission Company, as well as three state distribution companies, to strengthen their management capabilities and to make the companies more financially sustainable and service oriented.

The project will build on previous ADB investments in the state’s power sector ― including transmission and distribution assets ― totaling more than $1.3 billion since 2001. Along with ADB’s loan from ordinary capital resources, the Government of India will provide $150 million for a total investment cost of $500 million. It will run for about four and a half years with an estimated completion date of December 2018.