World Bank to lend $1.2 bn to PowerGrid

The World Bank has agreed, in principle, to provide a loan of $1.2 billion to the state-run PowerGrid Corporation for its transmission proje...

The World Bank has agreed, in principle, to provide a loan of $1.2 billion to the state-run PowerGrid Corporation for its transmission projects under the National Grid development programme. The World Bank would release the loan in three tranches of $400 million, each bearing an interest rate of three to four per cent. The proposed loan would be for 15 years, with a five-year grace period.

PowerGrid Corporation chairman and managing director RP Singh confirmed that the WB has agreed to provide the loan and said that the Bank was not rigid in its approach. ‘‘In fact, the Bank has told me that it will not do policing. Similarly, it will be flexible as far as alteration to be made by the Corporation in the list of transmission projects to be implemented from the proposed WB loan,’’ Singh said.

Singh, who met the WB officials during his visit in January 2004, said that the PowerGrid Corporation would plough the WB fund in the implementation of transmission projects of 15,000-mw, which include Barh, Kahalgaon, North Karanpura and projects from the northern and north-eastern region. ‘‘The Bank has accepted our suggestion on the formation of an in-house committee for the effective implementation of relief and rehabilitation and environment protection measures during the implementation of these projects,’’ Singh said.

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According to Singh, the PowerGrid Corporation had received $2.5 billion of assistance from WB, Asian Development Bank, OECF, KFW, JBI and other such multilateral agencies. The World Bank approved a loan of $450 million on May 3, 2001 for the implementation of east-north Inter-connector-I (Sasaram HVDC), East-South Inter-connector-II (Talcher-II Transmission System), Load Dispatch Centres in Eastern & Western Regions of the country for better grid management.

The Corporation had also raised $250 million from ADB with a maturity of 15 years, including a grace period of 4 years. The ADB loan came with an indicative spread of 80 basis points for the first seven years and 20 basis points for the balance period over LIBOR. The Corporation had utilised the ADB loan for the implementation of the Raipur-Rourkela and Kolhapur-Mapusa lines. Singh said the Corporation proposes to establish a National Grid having an inter-regional power transmission capacity of 30,000 MW by 2012 through a hybrid network of 765 kV EHV AC and HVDC transmission systems.

For the creation of such a National Grid, the total investment required under the Central transmission sector during 10th & 11th Plan has been estimated to be about Rs 71,000 crore. The Corporation plans to invest Rs 50,000 crore.