India: Meghalaya Power Distribution Sector Improvement Project

Sovereign Project | 51308-004

The Meghalaya Power Distribution Sector Improvement Project will strengthen and modernize the power distribution network, reduce technical and commercial losses, and improve the power quality of the distribution network in Meghalaya State. The project will enhance the institutional capacity of Meghalaya Power Distribution Corporation Limited (MePDCL) by (i) supporting the preparation of a distribution sector road map, including financial sustainability measures to improve MePDCL's planning capability and financial performance; (ii) introducing innovative components in project design; and (iii) building MePDCL's capacity to monitor the environmental and social impacts of projects. The project will also support pilot testing of gender and socially inclusive renewable mini grid energy systems, which have the potential for future replication.

Project Name Meghalaya Power Distribution Sector Improvement Project
Project Number 51308-004
Country India
Project Status Active
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Grant 9213-IND: Meghalaya Power Distribution Sector Improvement Project
Japan Fund for Poverty Reduction US$ 2.00 million
Loan 3996-IND: Meghalaya Power Distribution Sector Improvement Project
Ordinary capital resources US$ 132.80 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Energy / Electricity transmission and distribution

Gender Equity and Mainstreaming Effective gender mainstreaming
Description

The Meghalaya Power Distribution Sector Improvement Project will strengthen and modernize the power distribution network, reduce technical and commercial losses, and improve the power quality of the distribution network in Meghalaya State. The project will enhance the institutional capacity of Meghalaya Power Distribution Corporation Limited (MePDCL) by (i) supporting the preparation of a distribution sector road map, including financial sustainability measures to improve MePDCL's planning capability and financial performance; (ii) introducing innovative components in project design; and (iii) building MePDCL's capacity to monitor the environmental and social impacts of projects. The project will also support pilot testing of gender and socially inclusive renewable mini grid energy systems, which have the potential for future replication.

The project is aligned with the following impact: 24x7 power for all households, industries, commercial businesses, public needs, and other electricity consuming entities achieved. The project will have the following outcome: efficiency, reliability, and quality of power supply to consumers at distribution level in Meghalaya improved.

(i) Output 1: Distribution network in Central, East Garo Hills, and West Garo Hills strengthened and modernized. To improve the reliability of power supply to rural electricity consumers and reduce technical losses, the project will (i) construct 23 new 33/11 kV substations, and renovation and modernization of 45 33/11 kV substations, including control room equipment and protection systems; (ii) install 136 auto-reclosers and 597 fault passage indicators at 11 kV and 33 kV lines; (iii) install and upgrade 2,214 kilometers (km) of 33 kV and 11 kV distribution lines; and (iv) renovate the rural distribution network to support mini grid in generation in three selected villages.

(ii) Output 2: System for meter reading, billing, and collection improved. To reduce commercial losses, the project will replace existing outdated electromechanical meters with smart meters targeting about 180,000 households (about 29% of consumers), and a new meter-testing laboratory will be installed and commissioned. The project will also implement a smart metering scheme with online meter reading, billing, and collection with automatic disconnection and reconnection of services for up to 75,000 consumers. The project will also be used to evaluate the technical and commercial feasibility for MePDCL in extending smart metering across the state in the future.

(iii) Output 3: Capacity of executing agency to plan and implement distribution sector projects strengthened. This will include support for (i) preparation of a distribution sector road map that will outline immediate, medium-term, and long-term investments, strategies, and policies to systematically develop the distribution sector to meet future system demands and service standards; (ii) preparation of a financial road map to support MePDCL in achieving financial sustainability through financial improvement action plans in meeting UDAY Financial Restructuring Plan (FRP) targets, separating the financial and human resources functions of MePDCL from MeECL, and strengthening their internal audit systems; and (iii) implementation support to effectively monitor the project and ensure its technical, procurement, and safeguard compliances as required. The road maps and implementation support aim to develop MePDCL's technical and financial capacity to systematically plan, design, and manage the distribution networks.

(iv) Output 4: Efficient and productive use of gender- and socially-inclusive mini grid energy systems pilot-tested and promoted. Renewable energy mini grids will be pilot-tested in the villages of Lower Jambal, Dilma Ading, and Kosigre, and in three selected schools in the villages. The mini grids will improve power quality and support income generation, especially for women and other socially disadvantaged groups, using indigenous energy resources. The villagers will be engaged in income-generating activities and provided with relevant skills training, start-up capital, and support for market linkage. The project will conduct awareness-raising sessions for villagers and students on mini grids and their productive use with support from a JFPR grant.

Project Rationale and Linkage to Country/Regional Strategy

The state economy. Meghalaya is a state in northeastern India with a population of about 3 million that shares its border on the north and east with the state of Assam, and on the south and west with Bangladesh. Meghalaya has the highest rainfall in India, recording an annual average of 12,000 millimeters. About 70% of the state is covered with forest. Meghalaya has some of the densest tropical rainforests in the country, and therefore constitutes one of the most important ecotourism destinations in India. Meghalaya's economy is predominantly agrarian and has a significant commercial forestry-based industry. The state has abundant natural resources, including mineral deposits (such as coal, limestone, granite, and clay), and offers significant opportunities for investment. In fiscal year (FY) 2019, the primary sector (agriculture, forestry, mining, and quarrying) contributed 25.92% of gross state domestic product; the secondary sector (hydropower, agro-based and food processing, chemicals, and allied industries) contributed 16.83%; and the tertiary sector, which is the fastest-growing sector, driven by trade, hotels, real estate, finance, insurance, transport, communication, and other services, contributed the remaining 57.25%. Despite its rich resource endowments and tourism potential, industry in the state continues to lag behind other states because of its poor infrastructure facilities. With an average annual per capita income of 90,213, Meghalaya is one of the poorest states in the country and in the northeastern region. Meghalaya is also one of the few states in India that, despite having surplus availability, have low per capita electricity consumption of 832 kilowatt-hours (kWh) against the national average of 1,122 kWh in 2017.

Power sector overview. Under the Meghalaya Power Sector Reforms Transfer Scheme 2010, the state government unbundled the Meghalaya State Electricity Board into four separate companies along with their physical assets, properties, liabilities, obligations, and staff. The four successor companies are (i) Meghalaya Energy Corporation Limited (MeECL), the holding company; (ii) Meghalaya Power Generation Corporation Limited, the generation utility; (iii) Meghalaya Power Transmission Corporation Limited, the transmission utility; and (iv) Meghalaya Power Distribution Corporation Limited (MePDCL), the distribution utility. Although the companies were officially unbundled, the lack of independent finance and administrative functions, together with poor financial management and planning capacity of subsidiaries, hinders them from progressing towards financial sustainability.

Meghalaya had a total installed generating capacity of 613 megawatts (MW) in June 2018, of which 426 MW was generated from hydropower (355 MW owned by the state utility and 71 MW from the central allocation), and the remaining 187 MW was from thermal-based generation capacity from the central government allocation to Meghalaya State. Meghalaya draws upon this central allocation to meet winter season deficits. Peak demand in FY2017 reached 399 MW and is expected to reach 470 MW in FY2021. Additional generation capacity is required to achieve Meghalaya's 24X7 Power for All initiative, which aims to bring an uninterrupted supply to each consumer in the state, even under the normal load-growth scenario. Meghalaya has surplus generation capacity during summer because of high hydropower availability and low demand, but it experiences a capacity deficit in winter because of high demand and low hydropower availability.

Power distribution issues. Although Meghalaya achieved 100% electrification for rural and urban households (635,802 consumers) in February 2019, the voltage at consumer premises drops below the allowable limit of 6% of the rated voltage during peak load periods. Further, power interruptions of more than 6 hours per day are common in remote rural networks. The average aggregate technical and commercial (AT&C) losses of the distribution network in 2017 were 32.65%. AT&C losses attributable to three of the six circles of the Meghalaya distribution network (Central, East Garo Hills, and West Garo Hills) are estimated to be more than 50%. Further, the existing distribution network is overloaded. Most of the 33/11 kilovolt (kV) substations in rural areas have outdated technology and lack control rooms, making it difficult to operate the system, particularly during heavy rains and mist that are prevalent year-round in many parts of the state. MePDCL's billing efficiency is only 67.35% as about 75% of the consumer meters installed by MePDCL are outdated, resulting in high commercial losses. High AT&C losses, aged distribution assets, and subsidized tariffs for the poor and agricultural consumers are the major reasons for the below-cost revenue recovery that has led to the poor financial state of the distribution utility. The huge capital requirements to develop the aged infrastructure, and the subsidized tariff in rural areas make rural electrification less attractive to the private sector.

Government programs for the distribution sector. 24X7 Power for All Meghalaya was a joint initiative of the Government of India and the state government of Meghalaya to provide an uninterrupted, quality, reliable, and affordable power supply to all domestic, commercial, agricultural, and industrial consumers (footnote 5). MePDCL also signed an agreement with the Ministry of Power and the state government of Meghalaya under the Ujwal DISCOM Assurance Yojana (UDAY) scheme to reduce its AT&C losses from 34.76% in FY2015 to 15.00% by FY2020. This was to be achieved through various central government supported schemes, such as (i) the Integrated Power Development Scheme; (ii) Deen Dayal Upadhyaya Gram Jyoti Yojna; and (iii) Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya). Although Meghalaya achieved 100% electrification through the Saubhagya scheme, the implementation of measures identified under other schemes is progressing slowly because of lack of sufficient funds. The project will help MePDCL implement some of these measures, such as metering, network strengthening, and billing efficiency improvement. Without the proposed intervention, AT&C losses are projected to exceed 42% by 2024.

Impact 24x7 power to all households, industry, commercial businesses, public needs, and any other electricity consuming entity achieved
Project Outcome
Description of Outcome Efficiency, reliability and quality of supply for distribution consumers in Meghalaya improved
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Distribution network in Central, East Garo Hills and West Garo Hills strengthened and modernized

System for meter reading, billing and collection improved

Capacity of executing agency to plan and implement distribution sector projects developed

Efficient and productive use of gender- and socially inclusive mini grid energy systems pilot-tested and promoted

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Meghalaya
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services Estimated about 4 firms. The firms will support (i) the implementation and monitoring of the project; (ii) in preparing distribution sector roadmap for MePDCL; (iii) framing a financial roadmap for MePDCL; and (iv) capacity building support for rural community using JFPR grant.
Procurement Estimated about 8 procurement packages . This includes 4 distribution substation packages, 2 distribution lines packages, one smart meter package and one package for JFPR grant project.
Responsible ADB Officer Kolantharaj, Jaimes
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Meghalaya Energy Corporation Limited (MeECL)
Lumjingshai, Short Round Road, Shillong-
793001, Meghalaya, India
Ministry of Finance (Aid Accounts & Audit Division)
[email protected]
5th Floor, B Wing, Janpath Bhawan
Janpath, New Delhi 110 001
India
Timetable
Concept Clearance 06 Sep 2019
Fact Finding 21 Jan 2020 to 24 Jan 2020
MRM 20 Apr 2020
Approval 30 Oct 2020
Last Review Mission -
Last PDS Update 10 Mar 2021

Grant 9213-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 Oct 2020 01 Dec 2020 15 Feb 2021 28 Feb 2026 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 2.00 Cumulative Contract Awards
ADB 0.00 29 Sep 2021 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 2.00 29 Sep 2021 0.00 0.00 0%

Loan 3996-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
30 Oct 2020 01 Dec 2020 15 Feb 2021 28 Feb 2026 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 166.00 Cumulative Contract Awards
ADB 132.80 29 Sep 2021 101.02 0.00 76%
Counterpart 33.20 Cumulative Disbursements
Cofinancing 0.00 29 Sep 2021 18.50 0.00 14%

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


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Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Appointment of Consultant for Developing Distribution Master Plan for MePDCL Firm - Consulting Closed 30 Apr 2021 30 Jun 2021
Enhancing the Livelihood of Rural Community of Meghalaya through use of Renewable Energy System Firm - Consulting Closed 22 Jan 2021 08 Mar 2021
51308-IND: Meghalaya Power Distribution Sector Improvement Project [OCB No. Pkg-1/LINE/ADB/2020] Invitation for Bids Closed 14 Jul 2020 11 Sep 2020
51308-IND: Meghalaya Power Distribution Sector Improvement Project [OCB No. Pkg-2/LINE/ADB/2020] Invitation for Bids Closed 14 Jul 2020 11 Sep 2020
Project Implementation Consultants for Meghalaya Energy Corporation Limited Firm - Consulting Closed 21 Feb 2020 21 Mar 2020
51308-IND: Meghalaya Power Distribution Sector Improvement Project [OCB No: Pkg-I/SM/ADB/2020] Invitation for Bids Closed 06 Feb 2020 19 Jun 2020
51308-IND: Meghalaya Power Distribution Sector Improvement Project [OCB No: Pkg-I/SS/ADB/2019] Invitation for Bids Closed 18 Oct 2019 15 Jan 2020
51308-IND: Meghalaya Power Distribution Sector Improvement Project [OCB No: Pkg-IV/SS/ADB/2019] Invitation for Bids Closed 18 Oct 2019 15 Jan 2020
51308-IND: Meghalaya Power Distribution Sector Improvement Project [OCB No: Pkg-II/SS/ADB/2019] Invitation for Bids Closed 18 Oct 2019 15 Jan 2020
51308-IND: Meghalaya Power Distribution Sector Improvement Project [OCB No: Pkg-II/SS/ADB/2019] Invitation for Bids Closed 18 Oct 2019 10 Dec 2019
51308-IND: Meghalaya Power Distribution Sector Improvement Project [OCB No: Pkg-II/SS/ADB/2019] Invitation for Bids Closed 18 Oct 2019 10 Dec 2019
51308-IND: Meghalaya Power Distribution Sector Improvement Project [OCB No: Pkg-III/SS/ADB/2019] Invitation for Bids Closed 18 Oct 2019 15 Jan 2020

Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
PACKAGE C2: PROJECT IMPLEMENTATION CONSULTANTS CONTRACT NO.: MEPDCL/CE(RE)/T-191/2020-21/110 Loan 3996 07 Apr 2021 M/S SMEC INTERNATIONAL PTY LTD (AUS) IN JV W/ | 1ST FLOOR NOVUS TOWER WEST WING PLOT NO. 18, SECTION 18, GURUGRAM 122015 HARYANA AUSTRALIA Meghalaya Energy Corporation Limited (MeECL) 457,196.55 450,744.41
PACKAGE 1 - PROCUREMENT OF SMART METERS Loan 3996 01 Mar 2021 JV SATNAM GLOBAL INFRA, JPM AND INHEMETER | PLOT 272 FIE INDUSTRIAL AREA,PATPANAGANJ NEW DELHI INDIA Meghalaya Energy Corporation Limited (MeECL) 27,290,794.14 26,859,655.50
PACKAGE 1: 33/11KV SUBSTATION DEVELOPMENT WORK (EAST KHASI) Loan 3996 18 Feb 2021 M/S GUPTA POWER INFRASTRUCTURE LTD | CUTTACK RD, NEAR BUDHESWARI TEMPLE BHUBANESHWAR 751006 ODISHA, INDIA Meghalaya Energy Corporation Limited (MeECL) 12,089,958.90 12,089,958.90
PACKAGE 2/SS - CENTRAL CIRCLE (WEST KHASI) -33/11 KV SUBSTATION DEVELOPMENT WORK Loan 3996 18 Feb 2021 VINDHYA TELELINKS LIMITED | 4&5 PRIUS GLOBAL SECTOR 125, GAUTAM BUDDHA NAGAR, UTTAR PRADESH INDIA Meghalaya Energy Corporation Limited (MeECL) 6,657,342.63 6,657,342.63
0ACKAGE 3/SS EAST GARO HILLS 33/11 KV SUBSTATION DEVELOPMENT WORKS Loan 3996 18 Feb 2021 SR CHADDHA INDUSTRIES LTD. | 147/1030 CIVIL LINES, NEAR CIRCUIT HOUSE UTTAR PRADESH INDIA Meghalaya Energy Corporation Limited (MeECL) 8,672,376.52 8,573,250.16
PACKAGE 4/SS CENTRAL CIRCLE (WEST GARO HILLS)-33/ 11 KV SUBSTATION DEVELOPMENT WORK Loan 3996 18 Feb 2021 ACDC SAIDEEP BUILDCON PVT. LIMITED (LEAD) | 425/79, ASHWINI APARTMENT, FLAT NO. 2 TMV COLONY GULTEKADI PUNE MAHARASTHRA INDIA Meghalaya Energy Corporation Limited (MeECL) 11,369,202.42 11,239,251.00

Procurement Plan

None currently available.