ADB to Fund Power Sector Investment Program in Assam

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Researched by Industrial Info Resources India (Delhi, India)-- Multilateral funding agency Asian Development Bank (ADB) (Manila, Philippines) has proposed to invest $300 million to finance the Second Assam Power Sector Investment Program, which envisages addition of power generation capacity and improvement of efficiency of the power distribution system in the northeastern state of India.

Proposed to be realized through a Multi-tranche Financing Facility (MFF), the investment seeks to support the state's initiative to supply adequate and affordable power to the consumers in the state. The first Tranche of the investment, expected be of the order of $50 million, intends to finance a capacity enhancement project at a 60-megawatt (MW) Gas-based power station in Assam and also to aid capacity building programs of the state-run Assam Power Generation Corporation Limited (APGCL) (Guwahati, Assam) and Assam Power Distribution Company Limited (APDCL) (Guwahati, Assam). Meanwhile, the future tranches are aimed at financing the construction of 120MW Lower Kopili hydro power project along with the Distribution reliability and efficiency improvement projects in urban areas.

Assam is one of the most power deficient states in India with peak deficits exceeding 25%. During 2011-12 the peak electricity demand in Assam was recorded at 1,250 MW; whereas, the availability of power, including the states own generation, was only 960MW leaving a peak capacity deficit of 290MW, which translates to a shortfall of 23.2%. Further, per capita consumption of electricity in the state is one of the lowest in India. Assam had only 209.21 kilowatt-hour (kWh) per capita consumptions per year against the all India average of 739.44 kWh per year in 2009-10.

Out of the total 25,124 villages in the state, only 19,729 (78%) villages were electrified till 2010-11. The government has taken up initiatives to supply power all the villages by 2017. Moreover, there are about 700 tea gardens in the state with an average demand of 300 kW. The cumulative demands of these tea gardens stand at around 210MW; of which is only about 60MW is grid supplied and rest is being met with the coal.

According to ADB, these factors are indicators of an exponential growth in the state's electricity demand which is expected to reach 2,222MW in 2019-20 widening the deficit by as much as 516MW. To cater to the fast growing load, Assam needs significant investment for improving its transmission and distribution network, and enhancing the generation capacity.

Notably, ADB has assisted Assam in preparing a master plan and designing a low-cost solution for transmission and distribution system for the 11th five year plan (2007-2011). ADB had approved an MFF of $200 million to fund Assam Power Sector Enhancement Investment Program (APSEIP) in 2009.

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