fbpx 53192-001: Bengaluru Smart Energy Efficient Power Distribution Project | Asian Development Bank

India: Bengaluru Smart Energy Efficient Power Distribution Project

Sovereign (Public) Project | 53192-001 Status: Approved

The project will (i) convert overhead distribution lines to underground cables, with parallel installation of optical fiber cables; and (ii) install automated ring main units adapted with a distribution automation system (DAS) in six divisions, spanning 52 subdivisions, in urban Bengaluru city in the state of Karnataka. The Asian Development Bank (ADB)-funded component of the project will cover 17 out of these 52 subdivisions. As a result of this project, the efficiency, reliability, and safety of the power distribution system in urban areas of Bengaluru will be enhanced. The project will also strengthen the institutional capacity of BESCOM in operation and maintenance (O&M), environment and social safeguards, financial management, and corporate gender equality and social inclusion.

 
Project Name Bengaluru Smart Energy Efficient Power Distribution Project
Project Number 53192-001
Country India
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 4028-IND: Bengaluru Smart Energy Efficient Power Distribution Project
Ordinary capital resources US$ 100.00 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 Some gender elements
Description

The project will (i) convert overhead distribution lines to underground cables, with parallel installation of optical fiber cables; and (ii) install automated ring main units adapted with a distribution automation system (DAS) in six divisions, spanning 52 subdivisions, in urban Bengaluru city in the state of Karnataka. The Asian Development Bank (ADB)-funded component of the project will cover 17 out of these 52 subdivisions. As a result of this project, the efficiency, reliability, and safety of the power distribution system in urban areas of Bengaluru will be enhanced. The project will also strengthen the institutional capacity of BESCOM in operation and maintenance (O&M), environment and social safeguards, financial management, and corporate gender equality and social inclusion.

The project demonstrates an innovative project financing structure. The combination of sovereign and nonsovereign loans from ADB will significantly reduce the sovereign exposure and help BESCOM move towards a market-based approach for raising financial resources for capital expenditure. The project will introduce BESCOM to practices and procedures for accessing commercial financing from an international lender and instill financial management discipline during monitoring.

Project Rationale and Linkage to Country/Regional Strategy

Building an energy-efficient distribution network is one of the climate mitigation strategies identified under India's Nationally Determined Contributions. The Ministry of Power promotes the conversion of overhead distribution lines to underground lines, and the integration of information technology in the power distribution system of urban areas to reduce system losses under the Integrated Power Development Scheme. In addition, under the proposed DISCOM sector reform, it targets reducing the aggregate technical and commercial loss to 12% 15% by 2025. Building efficient urban infrastructure is a key provision, including the development of underground distribution networks in the Bengaluru urban area, under the Revised Master Plan 2031 for Bengaluru, aimed at developing a livable city.

In more general terms, modernizing power distribution networks in the Bengaluru urban area will (i) reduce distribution losses, thereby reducing the additional consumption of fossil fuels and associated greenhouse gas emissions and pollutants; (ii) improve the reliability and quality of the electricity service for more than 10 million people and high-technology industries; and (iii) contribute to developing a livable and disaster-resilient city.

The Government of Karnataka sets guidelines for access to sovereign borrowing from international financial institutions for revenue-generating sectors such as the energy sector. The aim is to maximize the allocation of sovereign borrowing space for nonrevenue-generating, poverty reduction-focused projects, and/or emergency responses to national crises caused by events such as the coronavirus disease 2019 (COVID-19). BESCOM falls in between revenue-generating and nonrevenue-generating segments, as a large part of the power sold by BESCOM is priced commercially while a portion is sold to the low-income households and the agriculture sector, priced below cost and requiring a GOK subsidy. For such entities falling between revenue-generating and nonrevenue-generating segments, the objective of using sovereign loans is to leverage to the maximum extent possible commercial nonsovereign borrowing. Consistent with this objective, the Government of India and the GOK seek ADB assistance to pilot test a combination of sovereign and nonsovereign financing for investment in Karnataka's power distribution segment. The provision of a nonsovereign loan by ADB without a sovereign guarantee from India, in combination with a sovereign loan, will act as a transition measure towards moving BESCOM towards full market-based financing - by (i) enhancing financial discipline; (ii) strengthening its financial performance through regular monitoring; and (iii) eventually enabling BESCOM to access borrowing from commercial banks both locally and internationally, without seeking credit enhancement from the GOK and/or the central government, thereby freeing up fiscal space. This pilot collaboration will provide lessons to structure similar initiatives in the future and open opportunities for large-scale lending on a combined basis to sub-sovereign entities, particularly in power distribution.

Impact Livable Bengaluru urban area developed
Project Outcome
Description of Outcome Energy efficiency, reliability, and safety of power supply system in Bengaluru urban areas improved
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Smart, and climate- and disaster-resilient power distribution system established in 6 districts in urban areas of Bengaluru

Institutional capacity of implementing agency improved

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Bengaluru
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
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 There are no consulting service contract packages to be procured using the loan.
Procurement All procurement of goods and works will be undertaken in accordance with ADB's Procurement Policy (2017, as amended from time to time) and Procurement Regulations (2017, as amended from time to time). The relevant sections of ADB's Anticorruption Policy (1998, as amended to date) will be included in all documents and contracts. All turnkey contract packages will be procured through open competitive bidding with prior review by ADB.
Responsible ADB Officer Oi, Teruhisa
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Timetable
Concept Clearance 21 Oct 2019
Fact Finding 12 Aug 2020 to 12 Aug 2020
MRM 09 Oct 2020
Approval 04 Dec 2020
Last Review Mission -
Last PDS Update 07 Dec 2020

Loan 4028-IND

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 187.30 Cumulative Contract Awards
ADB 100.00 - 0.00 0.00 %
Counterpart 87.30 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

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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Tenders

Tender Title Type Status Posting Date Deadline
53192-001-IND: Bengaluru Smart Energy Efficient Power Distribution Project Advance Notice Active 04 May 2020
53192-IND: Bengaluru Smart Energy Efficient Power Distribution Project [BESCOM/UG/OCB/20-21/T-19] Invitation for Bids Closed 16 Jun 2020 28 Jul 2020

Contracts Awarded

No contracts awarded for this project were found