The Asian Development Bank (ADB), in collaboration with the Asian Infrastructure Investment Bank (AIIB), has agreed to co-finance a grid stabilisation project in India.
As per the contract, ADB will give $1bn loan for additional power transmission network components, whereas AIIB has agreed to offer $150m to finance Green Energy Corridor and Grid Strengthening Project in the country.
Besides $500m of government-backed loan, ADB’s lending will include a further $500m in non-sovereign lending to India’s national transmission company Power Grid Corp of India (POWERGRID).
The project will be expanded to include 400kV transmission components in Tamil Nadu to connect at Pugalur with the long-distance grid systems financed by ADB. Upon completion, the project will facilitate increased energy supply to more provinces in India.
Under the agreement, AIIB will provide a co-financing of $100m for this component while the remaining amount will be financed by POWERGRID. The project is worth $303.5m.
ADB South Asia department energy division director Priyantha Wijayatunga said: “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. We look forward to broadening our partnership with AIIB in the coming years.”
AIIB vice president and chief investment officer D.J. Pandian said: "To mobilise sufficient funds to address the huge infrastructure needs across Asia, multilateral development institutions must collaborate with each other and a range of other partners.
"We will continue to welcome opportunities to combine our investments and talent with other international financial institutions to drive positive economic outcomes for people in the region."