WASHINGTON, November 29, 2021—The World Bank’s Board of Directors has approved a $135 million loan to the Indian state of West Bengal to improve operational efficiency and reliability of electricity supply in parts of the state.
West Bengal is strategically located along the corridor to the northeast and to southeast Asia and plays an important role in facilitating and promoting regional power trade. The state is already facilitating electricity trade with Bangladesh.
The rapid economic growth of West Bengal has led to an increase in electricity demand at a rate of 4.5% over the past five years. The number of consumers served by the West Bengal State Electricity Distribution Company Limited (WBSEDCL) has more than doubled over the past six years to nearly 20 million consumers. The main increase was recorded in rural areas, as the state is close to universal access to electricity. But this growth has also weighed on the finances of electricity distribution companies (Discoms). The COVID-19 crisis has added to this pressure, as demand for electricity from the commercial and industrial sectors – proportionally the main sources of revenue for Discoms – has fallen.
“The financial stability of electricity companies is essential to providing efficient and reliable electricity to people. The pandemic has adversely affected the financial health of power distribution companies in India and, consequently, the financial health of power generation companies,” noted Junaid Ahmad, Country Director of the World Bank in India. “The West Bengal Power Distribution and Grid Modernization Project will strengthen distribution networks, invest in smart grid technologies and ensure the financial viability of WBSEDCL. This could serve as an example for other distribution utilities across India. »
In May 2020, Super Cyclone Amphan caused extensive damage to power infrastructure in West Bengal. Support through the West Bengal Electricity Distribution and Grid Modernization Project aims to strengthen WBSEDCL’s information and communication systems and provide immediate response to similar crises and emergencies.
The project aims to reduce distribution system losses, increase the capacity of the distribution network to meet increasing load demand, improve the overall reliability of the system, make the network resilient to climatic disasters and improve the capacity institution of WBSEDCL.
“The project will support network investments to improve operational efficiency and reduce losses. It will also invest in smart grid technologies for better load management as well as the integration of distributed energy resources,” noted Rohit Mittal, the World Bank team leader for the project.
The Government of India, through its major programs such as Deendayal Upadhyaya Gram Jyoti Yojana and Sahaj Bijli Har Ghar Yojana, has been able to extend electricity access to almost every household in the country. The project will support the implementation of the Government of India’s Power For All 24×7 program in the state and support WBSEDCL in transitioning to a leading utility in India.
The project will be funded by the Government of West Bengal and loans from the Asian Infrastructure Investment Bank (AIIB) and the World Bank.
The $135 million loan from the International Bank for Reconstruction and Development (IBRD) is a variable spread loan with a 17-year term, including a seven-year grace period.