ADB, India sign $132.8 million loan agreement to strengthen Meghalaya's power distribution Sector

The Asian Development Bank (ADB) and the Government of India on Tuesday signed a $132.8 million loan agreement to strengthen the power distribution system of Meghalaya. The loan amount will be used to modernize the distribution network and improve the quality of power supplied to households, industries, and businesses in India's northeastern state of Meghalaya.

The project will construct 23 substations; renovate and modernize 45 substations, including the provision of control room equipment and protection systems; install and upgrade 2,214 kilometers of distribution lines and associated facilities covering three out of the six circles in the state. Installation of smart meters will benefit about 180,000 households.

The loan is proposed to be supplemented by a $2 million grant from ADB's Japan Fund for Poverty Reduction that will finance renewable energy mini-grids for improving power quality and supporting income generation activities, especially for women and other socially disadvantaged groups in three villages and three schools.

The signatories to the Meghalaya Power Distribution Sector Improvement Project were Dr. C. S. Mohapatra, Additional Secretary (Fund Bank & ADB), Department of Economic Affairs in the Ministry of Finance who signed for the Government of India, and Mr. Takeo Konishi, Country Director of ADB's India Resident Mission who signed for ADB.

After signing the loan agreement, Dr Mohapatra stated that the project supports the state government's "24x7 Power for All" initiative and will help the state reduce its high technical and commercial losses through network strengthening, metering and billing efficiency improvements.

"Technological improvements to the distribution network adapted to extreme weather, the introduction of smart meters and online meter reading, billing, and collection systems will help improve operational efficiencies and financial sustainability of the state's distribution system," said Mr. Konishi.

Though Meghalaya has achieved 100% electrification, remote rural areas in the state suffer from frequent power interruptions due to overloaded distribution networks and substations that use outdated technology, resulting in high aggregate technical and commercial (AT&C) losses. The Government of India and the state government of Meghalaya embarked on a joint 24x7 Power for All Meghalaya initiative to provide uninterrupted, quality, reliable, and affordable power supply to all electricity consumers.

The project will help develop a distribution sector road map and a financial road map for the Meghalaya Power Distribution Corporation Limited (MePDCL). These road maps will strengthen the capacity of MePDCL to operate and manage the distribution networks.