Power Grid gets $600 m loan from World Bank

Mar 20, 2008 - McClatchy-Tribune Regional News - Samiran Saha - Hindustan Times, New Delhi

The World Bank on Wednesday approved a $600-million loan to power transmission giant Power Grid Corporation of India (PGCIL) to strengthen the electricity transmission system to increase reliable power exchange between regions and states.

The Power System Development Project -IV of PGCIL aimed at reducing transmission losses would help cut cost of energy through further investments in transmission systems.

The project is expected to allow the transfer of power from surplus hydro electric power states to power deficient regions and help creating power generation facilities.

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 generation.

"India's policy reforms in the power sector are beginning to pay off," said Isabel Guerrero, World Bank Country Director for India.

"The sector's financial performance is improving and more and more villages are being electrified. At the same time, the need to boost the rural economy where about 30 percent of villages are not electrified and improve the investment climate are placing additional demands on the country's power supply system. This project will enable more power to reach the people across the country," Guerrero said.

The World Bank has been involved in the reform and development of the transmission sector in India, and specifically in the creation and strengthening of the Power Grid. The World Bank has made three direct loans to Power Grid since 1993. During this period, the company has nearly tripled its transmission network, its assets have grown more than eight-fold to $7.3 billion, and revenues have increased more than six times to over US$1 billion.