NEW DELHI, INDIA – The Asian Development Bank (ADB) and Government of India officials have signed a $315 million ADB loan to help fund the 450-megawatt Shongtong Karcham Hydroelectric Project in the district of Kinnaur, Himachal Pradesh.
The loan is the fourth tranche of an $800 million multitranche financing facility called the Himachal Pradesh Clean Energy Development Investment Program aimed at expanding the supply of power in the hill state. Better electricity supply will help businesses, contributing to job creation and poverty reduction.
Taking part in the signing ceremony on behalf of the Government of India was Prabodh Saxena, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, Ministry of Finance, and on behalf of ADB, Narhari Rao, Deputy Country Director of ADB’s India Resident Mission.
“Himachal Pradesh’s focus on hydropower development will provide jobs to residents and will further the state’s and the country’s goal of maximizing this clean, indigenous energy source to help meet its energy needs,” said Mr Rao.
The program, approved by ADB’s Board of Directors in October 2008, is helping finance four run-of-river hydropower projects totaling 856 megawatts. Himachal Pradesh Power Corporation Ltd. (HPPCL), the state government-owned power generation company, is developing the projects.
“This program not only benefits Himachal Pradesh by supplying affordable, reliable power to its residents, but will enable the export of excess power to the rest of the country for the benefit of power deficient states,” said Mr Saxena.
Himachal Pradesh, a small mountainous state with five major rivers, has about a quarter of India’s total potential hydropower resources. Recognizing this potential, the state government has approved a Hydro Power Policy that aims to make Himachal Pradesh the leading state hydropower producer.
The loan has a 25-year term, with a grace period of five years and interest determined in accordance with ADB’s LIBOR-based lending facility. KfW, the German development bank, will provide cofinancing through a separate loan totaling €150 million. The Government of Himachal Pradesh will provide counterpart funds of about $235 million for the $750 million project.