World Bank approves $600 mln loan to PGCIL

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New Delhi, Mar 19 (UNI) The World Bank today approved a 600 million dollar loan to the Power Grid Corporation of India Ltd (PGCIL) to strengthen the country's electricity transmission system in order to increase reliable power exchange between regions and states.

It will contribute to the clean energy initiative through both the ability to transfer surplus hydro energy to power deficit regions in the country and relieve some of the pressure to build generation facilities, particularly in and around the major load growth centres, a statement said.

The project will finance the strengthening of five transmission schemes--East-West Transmission Corridor, Western Region System Strengthening Scheme II, Eastern Region System Strengthening Scheme I, Balia-Bhiwadi HVDC Bipole System, and North-West Transmission Corridor.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 20-year maturity which includes a five-year grace period.

Despite a booming economy, India's growth potential is constrained by inadequate electricity services and limited power generation and supply infrastructure.

Over 40 per cent of the population is without electricity, and the cost of erratic and insufficient power supply is high for industry as well as households, which causes 60 per cent of Indian firms and a large percentage of homes to rely on captive or back-up generation.

The Electricity Act of 2003 brought together structural and regulatory reforms designed to foster competitive markets, encourage private participation and transform the state's role from service provider to regulator.

The Fourth Power System Development Project (PSDP IV) will facilitate these objectives of the Act and aims to reduce transmission losses and cut the cost of energy through further investments in transmission systems.

''India's policy reforms in the power sector are beginning to pay off. The sector's financial performance is improving and more villages are being electrified. At the same time, the need to boost the rural economy where about 30 per cent of villages are not electrified and the improved investment climate are placing additional demands on the country's power supply system,'' World Bank Country Director (India) Isabel Guerrero said.

''This project, by strengthening transmission networks within and between regions, will enable more power to reach the people across the country,'' he added.

The Indian government has established an ambitious mission of 'Power for All by 2012'. This will entail increasing country's installed generation capacity to more than 2,00,000 MW by 2012, up from the current level of 1,40,000 MW.

World Bank has been actively involved in the reform and development of the transmission sector in the country.

World Bank has made three direct loans to Power Grid since 1993. During this period, the company has nearly trippled its transmission network, its assets have grown more than eight-fold to 7.3 billion dollars, and revenues have increased more than six times to over one billion dollars.

UNI SR SG DS1544

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