The Asian Development Bank (ADB) has agreed to nance additional power transmission network components with co-financing from the Asian Infrastructure Investment Bank (AIIB) that will connect with an ADB-financed Green Energy Corridor and Grid Strengthening project in India.
The ADB financing for this comprised a US$500 million (RM2.12 billion) government-backed loan and a further US$500 million in non-sovereign lending to India’s national transmission company, Power Grid Corp of India Ltd (Powergrid), the international agency said in a statement.
In support of the Indian government’s Green Energy Corridor initiative, the ADB board approved — in December 2015 — two loans to build and upgrade inter-regional grid systems between the western and southern regions, and high voltage transmission lines and substations in the northern region. The system will mainly deliver solar and wind energy to wider locations in India.
To increase energy delivery to more provinces in India, the statement said the project will now be expanded to include 400 kilovolt transmission components in Tamil Nadu to connect at Pugalur with the long-distance grid systems financed by ADB.
ADB will provide US$50 million from savings from the earlier loans while AIIB has approved co-financing of US$100 million for this component, which has a total cost of US$303.5 million. Powergrid will finance the reminder.
“We are pleased that this first AIIB co-financed project in India will bring clean energy to more people and help the country achieve its ambitious renewable energy targets,” said Priyantha Wijayatunga, director of ADB’s energy division in its South Asia department.
Since 2016, ADB has co-financed four projects with AIIB, beginning with the M4 expressway development in Pakistan approved in June 2016, for which ADB and AIIB are each providing US$100 million.
Second, is a project to improve natural gas production and transmission in Bangladesh, financed by ADB for US$167 million approved in November 2006 and US$60 million from AIIB.
The third is a project to build a bypass road skirting the port city of Batumi, Georgia’s second-largest city, financed by US$114 million from ADB approved in March 2017 with the same amount coming from AIIB. In these three co-financed projects, ADB administers wholly or partially the assistance provided by AIIB.
For the India transmission project, ADB and AIIB will administer each of their loans in parallel, and collaborate on the basis of the co-financing arrangement, the statement added.