The loan programme aims to provide reliable power to agricultural customers in the rural areas of Maharashtra by adopting HVDS initiative


ADB agrees to provide $346m loan to Maharashtra. (Credit: Capri23auto from Pixabay.)

The Asian Development Bank (ADB) has reportedly signed a $346m loan agreement with the government of India to support the power supply for rural customers in the Indian state of Maharashtra.

Maharashtra’s Rural High Voltage Distribution System (HVDS) expansion programme has signed the agreement on behalf of the Government of India with ADB India resident mission director Takeo Konishi.

The loan programme is intended to provide reliable power to agricultural customers in the rural areas of Maharashtra by adopting HVDS initiative.

Maharashtra Ministry of Finance Department of Economic Affairs Additional Secretary Sameer Kumar Khare said: “Adoption of HVDS will reduce distribution losses, and enhance income for a farmer through improved agricultural productivity, Khare said after signing the loan agreement.

“The demand-driven program supports capacity building and awareness-raising on HVDS and will also establish a complaint redressal mechanism for rural consumers.”

ADB to provide $346m loan under RBL modality

ADB is offering the loan under its results-based lending (RBL) modality, where the release of funds s is linked to the achievement of planned results, then upfront expenditures, similar to the traditional investment lending.

The bank said that the programme is planned to be implemented until March 2022, and anticipates approximately 1.50,000 metered HVDS connections by then.

Also, the bank will support the efforts on increasing awareness on the benefits of HVDS than traditional electricity distribution network, along with effective use of electricity and water.

The extensive awareness would help expand the HVDS network to cover agricultural customers beyond 2022 and mobilise commercial financing.

The programme is also expected to create the institutional capacity of the Maharashtra State Electricity Distribution Company Limited (MSEDCL) on HVDS.

Konishi said: “Effective metering, billing and usage-based tariffs for customers served by HVDS network will set the stage for investments in energy-efficient pumps, drip irrigation and could support improvements in subsidy management.”

ADB said: “This first ADB-financed RBL program in South Asia’s energy sector will help in the early construction and installation of metered HVDS through the installation of about 46,800kms of grid extension lines, construction and upgrading of distribution substations.”

Furthermore, ADB will also provide an additional $1m for technical assistance to support the energy and water conservation activities.