The credit facilities will drive new and refurbished power distribution infrastructure in two corners of Asia.
The Asian Development Bank (ADB) has followed up a recent $600 million loan to expand electricity access in eastern Indonesia by offering $430 million finance to separate household and agricultural power distribution networks in the Indian state of Uttar Pradesh.
The multilateral development lender yesterday announced its Uttar Pradesh Power Distribution Network Rehabilitation Project will convert 65,000km of rural low-voltage power lines to aerial bundle conductors and will install a parallel, 17,000km network of 11 kV feeders to separate household and agricultural power supply.
The latter move will enable farmers to deploy solar power systems in agriculture, the ADB stated. The project will include a $2 million technical assistance grant from the ADB and the Japan Fund for Poverty Reduction which is available to ADB member states. The grant will help improve gender inclusivity, corporate governance, and financial management capacity at state distribution company Uttar Pradesh Power Corporation Limited.
The Indian move comes less than a week after the ADB published details of a $600 million second phase of its Sustainable Energy Access in Eastern Indonesia – Electricity Grid Development Program. The lender has provided a $600 million loan to state-owned power company Perusahaan Listrik Negara (PLN) to improve electricity access in nine provinces of the eastern Indonesian regions of Kalimantan, Maluku and Papua.
“The program will boost sustainable, equitable, and reliable access to electricity among the communities in remote eastern Indonesia, including through the use of solar and other renewable sources,” said ADB Southeast Asia energy director Toru Kubo in a press release issued by the lender last week.
With the first phase of the program launched in eight provinces of Sulawesi and Nusa Tenggara in 2017, 1.53 million new customers had been added to the PLN network by the end of last year, beating a target of providing access to electricity for 1.37 million people. The second phase of the project aims to plug 1.55 million customers into the network by 2024, the date the government has set to provide universal access to electricity.
PLN revenues will be impacted by a Covid-recovery move by the government to offer free electricity to 24 million people and a 50% discount to seven million more. The ADB loan will pay for medium and low-voltage power distribution infrastructure and “will increase PLN’s delivery of electricity powered by renewable energy to remote communities … sixfold,” according to ADB energy specialist Diana Connett.
The project also features a $3 million grant from Japan's Asia Clean Energy Fund, which is administered by the ADB. The grant money will enable renewables plants to improve system design and maintenance through the use of “advanced technologies.” A further $3 million grant has been made available by the Japan Fund for Poverty Reduction under the program.
The Indonesian government wants renewables to supply 23% of its power mix by 2025, up from 13% in 2016.