ADB Grants $346 Mn Loan for Rural Electricity in Maharashtra

ADB has approved a USD 346 million loan to help provide an efficient and reliable power connection to rural agriculture customers in Maharashtra.

The Asian Development Bank (ADB) has approved a USD 346 million loan to India to help provide an efficient and reliable power connection to rural agriculture customers in the state of Maharashtra.

Maharashtra, which is the second-most populous state in India, has nearly about half of its labor force engaged in agriculture and related activities in the rural areas. “Agriculture output, however, has been impacted by lack of irrigation, less-than-efficient use of electricity and water, as well as inadequate storage and connectivity to markets. The loan will support the state government’s high voltage distribution system (HVDS) program for new grid-connected rural agricultural customers across the state,” the bank issued in a statement.

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“Providing efficient, reliable, and good quality power to rural agriculture customers in Maharashtra will improve agricultural productivity and efficiency in the electricity value chain,” said ADB Senior Energy Specialist Len George. “Wider adoption of HVDS with metering and usage-based tariffs sets the stage for investments in energy efficient pumps, drip irrigation and could support improvements in subsidy management.”

The loan will be under ADB’s results-based lending (RBL) modality, where fund disbursements are linked to the achievement of agreed program results rather than to upfront expenditures, as is the case with traditional investment lending. This first ADB-financed RBL program in South Asia’s energy sector will help in the early construction and installation of metered HVDS through the installation of about 46,800 kilometers of 11 kilovolt (kV) grid extension lines, construction and upgrading of 121 33/11 kV distribution substations. The program will also build institutional capacity in the Maharashtra State Electricity Distribution Company Limited (MSEDCL) on HVDS.

The Government of Maharashtra and MSEDCL will arrange for counterpart funding of USD 357.1 million equivalent toward the USD 703.1 million total cost of the project. The program will be implemented by the Maharashtra Energy Department and MSEDCL.

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Recently, we had reported that the Maharashtra Energy Development Agency (MEDA) had issued a tender for the commissioning of grid-connected rooftop solar PV power plants under net metering at two sub-district hospitals and rooftop solar systems with full load battery back up at 10 rural hospitals in Maharashtra. The last date for bid submission on the tender is May 11, 2020.