New Delhi: The Asian Development Bank (ADB) and the Government of India signed a $300 million loan to upgrade rural power distribution networks to provide reliable electricity supply to consumers in the state of Uttar Pradesh on Friday, 18th December, according to press communication from the Ministry of Finance. The signatories to the tranche 1 loan for Uttar Pradesh Power Distribution Network Rehabilitation Project were C. S. Mohapatra, Additional Secretary, Department of Economic Affairs in the Ministry of Finance who signed for the Government of India, and Takeo Konishi, Country Director of ADB’s India Resident Mission who signed for ADB.
According to the Ministry of Finance, after signing the loan agreement, Addl. Secretary Mohapatra stated that upgrading the distribution network will help improve the quality and reliability of electricity supply, reduce the aggregate technical and commercial (ATC) losses, and restore the financial sustainability of the rural electricity supply in Uttar Pradesh.
“The project will establish separate feeders for electricity supply to agriculture and residential consumers to promote better rationing and utilisation of unmetered power; strengthen the financial management of the state power distribution entity; and improve bill collection in rural areas through community engagement involving the women’s self-help groups,” said Director Konishi.
Overall, the $430 million multi-tranche financing facility (MFF) approved for the project constituting two tranches, envisages conversion of 65,000 kilometres of rural low-voltage distribution lines from bare conductors to aerial bundle conductors (ABC) to create a robust distribution network that will benefit an estimated 70 million people in 46,000 villages. The feeder separation network to be established over 17,000 km for agriculture and domestic consumers will facilitate the use of solar energy to meet the agriculture demand, increase in electricity supply duration to rural residential consumers, and energy and water conservation. In addition, the project will improve the gender inclusivity, corporate governance, and financial management capacity of Uttar Pradesh Power Corporation Limited (UPPCL), the Finance Ministry stated.
To improve bill collection, the project will pilot test engaging rural women through women’s self-help groups as community collection agents which will also help increase their family income.
The MFF is proposed to be complemented by a $2 million technical assistance (TA) grant from ADB’s TA Special Fund and the Japan Fund for Poverty Reduction to strengthen the gender inclusivity and institutional capacity building of Uttar Pradesh power sector.
The Finance Ministry stated that ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members, 49 of whom from the region.
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