India inks USD 826 mn loan agreement with ADB

New Delhi, Mar 31 (PTI) The Indian government has signed three loan agreements totalling USD 826 million with multilateral funding agency Asian Development Bank (ADB) to help the country efficiently transfer electricity from surplus regions to power-deficit regions. Of this, USD 500 million sovereign-guaranteed loan and a USD 250 million non-sovereign corporate loan will establish a 1,300-plus kilometre interregional transmission link. This is to allow bulk transfer of electricity from independent power producers in the central state of Chhattisgarh to areas of high demand in the north, a finance ministry statement said Friday. Besides, the third loan of USD 76 million is for connecting the union territories of Daman and Diu and Dadra and Nagar Haveli into the western regional grid. "This is a pioneering initiative to club a non-sovereign loan of USD 250 million with a sovereign loan of USD 500 million in one financing package," Joint Secretary in the Ministry of Finance Venu Rajamony said. Rajamony added that this loan has set a benchmark for future commercial lending not only to Power Grid but all Central Public Sector Undertakings. Speaking on the occasion, ADB representative Rana Hasan said: "The project will strengthen the national power grid through achieving enhanced transmission capacity and reliability of supply". The sovereign loans will have a 25-year term, including a five-year grace period with an annual interest rate determined in accordance with ADB's LIBOR-based lending facility. PTI