Government of India & AIIB sign agreement for $304 million

Government of India & AIIB sign agreement for $304 million to improve reliability, capacity and security of the power transmission network in the state of Assam

The Government of India and the Asian Infrastructure Investment Bank (AIIB) today signed a loan agreement for a $304 million Assam Intra-State Transmission System Enhancement Project to improve reliability, capacity and security of the power transmission network in the State of Assam.

The project aims to strengthen Assam’s electricity transmission system by

1. constructing 10 transmission substations and laying transmission lines with the associated infrastructure;
2. upgrading 15 existing substations, transmission lines and existing ground wire to optical power ground wire; and
3. providing technical assistance to support project implementation.

The programme would strengthen the existing intrastate transmission network of Assam by augmenting it with newer networks to achieve affordable, secure, efficient and reliable 24×7 power. This would, in turn, bring Assam closer to ensuring long-term sustainability of its electricity supply.

The loan agreement was signed by Shri Baldeo Purushartha, Joint Secretary, Department of Economic Affairs, Ministry of Finance on behalf of the Government of India, and Shri Rajat Misra, Acting Director General, Investment Operations on behalf of the AIIB.

Shri Purushartha said that the project is expected to improve the transmission network and reduce transmission losses. The strong backward and forward linkages associated with the project will create socio-economic opportunities for both households and business communities in the State. Shri Purushartha added that this project financing will help achieving the AIIB energy sector mandate and also support Government of India in fulfilling the national development priorities.

The State of Assam currently witnesses substantial energy and peak demand deficits. One of the main reasons for the power-deficit scenario in Assam is congestion of the electricity distribution and transmission networks. Assam Electricity Grid Corporation Limited (AEGCL), the sole transmission utility in Assam is responsible for the operation, maintenance and development of the transmission system in the State. AEGCL currently operates 66 substations with 6,882 megavolt-ampere capacity, and its transmission network comprises 5,701 circuit kilometers of transmission lines.  The project would improve the transmission network constraints and congestion in the state.

Shri D.J. Pandian, vice-president, AIIB, said that the AIIB’s investment will improve the reliability, capacity and security of the power transmission network in Assam. The project will also help in reducing greenhouse gas emissions and improve the quality of power supply to the ultimate consumers.

The total estimated cost of the project is $365 million, of which $304 million will be financed by the AIIB while the counterpart funding from the Government of Assam is $61 million. The $304 million loan from the AIIB has a 5-year grace period and a maturity of 24 years.