The central government and the Asian Infrastructure Investment Bank (AIIB) on Tuesday signed a $304-million loan agreement to fund the Assam Intra-State Transmission System Enhancement Project .

The project aims to strengthen the state’s electricity transmission system by constructing 10 transmission substations and laying transmission lines with the associated infrastructure as well as upgrading 15 existing substations, transmission lines, the Ministry of Finance said in a statement. Additionally, the project will involve upgrading existing ground wire to optical power ground wire.

The total estimated cost of the project is $365 million, of which $304 million will be financed by AIIB while the Assam government will provide counterpart funding of $61 million. The loan comes with a 5-year grace period and a maturity of 24 years. One of the main reasons for the power-deficit scenario in Assam is the congestion of the electricity distribution and transmission networks, the statement said. Assam Electricity Grid Corporation Ltd, the state’s transmission utility currently operates 66 substations with 6,882 megavolt-ampere capacity, and its transmission network comprises 5,701 circuit kilometers of transmission lines.

The loan agreement was signed by Baldeo Purushartha, Joint Secretary, Department of Economic Affairs, Ministry of Finance on behalf of the Government of India, and Rajat Misra, Acting Director General, Investment Operations on behalf of the AIIB. Since last year, the Beijing-based multilateral bank has ramped up financial support to India even as the latter's relations with China have come under strain.

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