Bengal secures 135 million World Bank loan to upgrade rural power distribution network

International Bank for Reconstruction and Development (IBRD) has approved a USD 135 million loan to West Bengal to improve the operational efficiency and reliability of electricity supply in select pockets in the state.

The IBRD and its concessional lending arm, the International Development Association (IDA), are collectively also called the World Bank.

The variable spread loan ​or floating interest loan ​will have a maturity of 17 years, including a grace period of seven years and will aim to strengthen distribution networks, invest in smart-grid technologies, and ensure financial sustainability of the state discom.

''The financial stability of electricity companies is critical to providing efficient and reliable electricity to people. The pandemic has adversely affected the financial health of electricity distribution companies in India and in turn the financial health of the electricity generation companies,'' World Bank’s Country Director in India Junaid Ahmad said in a statement issued from global headquarters.

The West Bengal Electricity Distribution and Grid Modernisation Project aims to reduce distribution system losses, increase the capacity of the distribution network to meet the growing load demand, improve the overall reliability of the system, make the network resilient to climate disasters, and improve the institutional capacity of West Bengal State Electricity Distribution Company Ltd​, the state distribution company​.

Economic growth in West Bengal has resulted in a growing electricity demand at a rate of 4.5 per cent in the past five years. The number of consumers has more than doubled in the past six years to almost 20 million consumers under ​the ​state distribution company.

''The main increase has been in rural areas as the state has reached close to universal electricity access. However, this growth has also put a strain on the finances of electricity distribution companies (Discoms). The COVID-19 crisis has added to this strain, as electricity demand from commercial and industrial sectors—proportionally the largest sources of revenue for Discoms -- has plummeted,'' the World Bank said.

The project will support the implementation of the Government of India’s 24X7 Power For All Programme in the state and support WBSEDCL in transitioning toward a leading public sector utility in India.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)