The Power Grid Corp of India Ltd (Powergrid) signed a loan agreement with the World Bank (WB) for $600 million March 28, the firm announced on Monday.
Powergrid chairman and managing director R.P. Singh and WB country director-India Isabel M. Guerrero signed the agreement, which is secured by a government of India guarantee.
According to the company, the loan will be utilised to fund a basket of Powergrid's transmission projects during the 11th Five Year Plan like strengthening the transmission system in the power deficit regions of India and enhancing the inter-regional power transmission capacity.
Powergrid will utilise the loan amount to implement high voltage direct current (HVDC) terminal stations at Balia in Uttar Pradesh and Bhiwadi in Rajasthan along with inter-regional and grid strengthening schemes for formation of strong and vibrant national grid.
Prior to this, Powergrid, which is responsible for developing and operating regional and national transmission grid, has availed loans of $1.7 billion from the WB.
Earlier, a fortnight ago, the WB announced that the Fourth Power System Development Project (PSDP-IV) would strive to reduce transmission losses and cut the cost of energy through further investments in transmission systems.
It will also contribute to the clean energy initiative through both the ability to transfer surplus hydro energy to power deficit regions in India and relieve some of the pressure to build generation facilities, particularly in and around the major load growth centres.
The project will finance the strengthening of five transmission schemes: East-West Transmission Corridor, Western Region System Strengthening Scheme II, Eastern Region System Strengthening Scheme I, Balia-Bhiwadi HVDC Bipole System, and North-West Transmission Corridor.
The loan, from the International Bank for Reconstruction and Development (IBRD), has a 20-year maturity, which includes a five-year grace period.
The central government is pursuing an ambitious mission of 'Power for All by 2012'. This will entail increasing country's installed generation capacity to more than 200,000 MW by 2012, up from the current level of 140,000 MW.