Thaindian News

New Delhi, Aug 17 (IANS) The Asian Development Bank (ADB) Wednesday offered a $200 million concessional loan to India to help improve electricity distribution in rural areas of Madhya Pradesh.

This is the first tranche of a $400 million loan approved under the Madhya Pradesh energy efficiency improvement investment programme.

“The programme will help improve electricity distribution in rural areas of Madhya Pradesh, and help in providing reliable 24-hour electricity supply to rural households that will stimulate business, employment and education,” the finance ministry said in a statement.

Venu Rajamony, joint secretary (Multilateral Institutions), Department of Economic Affairs, and Hun Kim, ADB country director for India, signed the loan agreement here Wednesday.

Old distribution lines and transformers result in poor quality supply of electricity in most rural areas of Madhya Pradesh. The ADB loan will be used to help establish separate power feeders for households and agricultural use, install high-voltage distribution systems, provide new power connections and improve the financial sustainability of distribution companies.

“The investment programme will help ensure a constant, reliable supply of electricity which will bring broad benefits to over 2.6 million households and will provide new power connections to 1.3 million homes,” Rajamony said after signing the agreement.

The loan has a 25-year term with a grace period of five years and interest determined in accordance with ADB’s LIBOR-based lending facility. The technical assistance grant comes from ADB’s concessional Technical Assistance Special Fund.