By Snigdha Kalra
The World Banks International Bank for Reconstruction and Development (IBRD) and Asian Infrastructure Investment Bank (AIIB) have signed an agreement with the Government of India and that of Andhra Pradesh to extend a total of $380 million in loans to finance power projects in Andhra Pradesh. It will help provide reliable round the clock power in the state under the Power for All initiative. The AIIB is a development bank that provides assistance to the development of infrastructure in the Asia-Pacific region. The IBRD is a member of the World Bank Group which provides finance to developing countries.
The Power for All initiative
24×7 Power for All (24×7 PFA) is an initiative taken up by the Government of India, together with the State Governments. It aims to provide round the clock power availability to households, businesses and industries. It also aims to provide adequate power for agriculture by FY 2019.
The government started this project to improve the standard of living that is stifled by power shortages across the country. The Ministry of Power, India started this project with 36 states and the Union Territories. The power projects in Andhra Pradesh fall under this initiative. The total cost of this project is $570 million. The IBRD and AIIB have provided $240 million and $140 million respectively. The rest will be financed by the Andhra Pradesh government. The World Bank and AIIB will provide loans in a 60:40 ratio for all the components of the project.
The power sector in India
The demand for power in India is set to explode in the coming years with a rapidly increasing population and industrialisation. Even the most developed states do not get 24×7 electricity and face frequent power cuts. India has suffered due to the lack of effective implementation of energy initiatives and projects. Even though India has adequate power generation capacity, this power does not reach the whole of India due to the problems in last-mile connectivity with consumers. Coal reserves exist in abundance, which can be used to fuel power plants. They too are being wasted because of old mining techniques, lack of modern infrastructure as well as rampant corruption.
Losses in transmission and distribution exceed 30% of the total power generation. Theft of electricity leads to annual losses of about $16 billion, rendering companies bankrupt. Other major problems include poor pipeline connectivity, slowing down of hydroelectric power projects due to environmental concerns, hindrances in nuclear power generation, failure of capital equipment and the lack of clean and reliable energy resources.
Benefits of the power project
Energy demand in Andhra Pradesh was 56,313 GWh in FY 2015 and it is expected to grow to 78,900 GWh by FY 2019. The increase in energy requirement necessitates the creation of more power plants to avoid dire shortages in the near future. Under this project, the government aims to build more efficient infrastructure for transmission and distribution of electricity. The reliable delivery of electricity is expected to be increased through this new power project.
Various modern technology solutions are being used for this project. They include automated substations, network analysis and smart consumer meters with two-way communication. The improvements in the power supply will also raise customer satisfaction. Hisham Abdo Kahin, Operations Manager and Acting Bank Country Director, World Bank, India said, the project will contribute to economic development, poverty alleviation and inclusive growth in Andhra Pradesh.
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