The World Bank has announced $ 240 million credit line to support Andhra Pradesh Government's effort to provide 24x7 quality and affordable power to its citizens.

The loan from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 19 years.

The project is the first in India being co-financed by the Asian Infrastructure Investment Bank (AIIB). The World Bank and AIIB will provide loans in a 60:40 ratio for all components of the project.

The World Bank Board last week approved the loan that will help build new transmission and distribution infrastructure, as well as put in place systems to improve the technical efficiency and commercial performance of the state power sector utilities.

While a significant portion of the proposed investments are aimed at improving power supply to rural areas, the project will also focus on demonstrating the deployment of smart grids in selected towns.

The project is part of the Government of India’s Power for All programme launched in 2014. Andhra Pradesh is one of the first states to roll-out the programme.

The energy demand in the state is expected to grow to 78,900 GWh (Gigawatt-hour) by FY 2019 from 56,313 GWh in FY 2015, which shows an annual energy requirement of more than 8.5 per cent.

“By increasing the supply of reliable electricity to households, industries, businesses and various other productive sectors, the project will contribute to economic development, poverty alleviation, and inclusive growth in Andhra Pradesh,” Junaid Ahmad, World Bank Country Director in India, said in a statement.

The projects seeks to strengthen the intra-state transmission and distribution network, bring down transmission losses and set up a High Voltage Distribution System in selected rural areas.

The project will also support smart consumer meters, with two-way communication and backend IT infrastructure, deployed in select urban towns.

Mani Khurana, Senior Energy Specialist and World Bank’s Task Team Leader for the project, said, “The smart grid interventions under the project will demonstrate positive impacts on reliability and network management which can inform the design of similar projects in other states.”

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