Assam’s power sector faced serious challenges in the late 2000s. Only one-third of households had access to electricity. Frequent power outages, lasting 5–6 hours a day during the peak season, created significant problems for consumers. Assam lagged behind India’s other states in terms of rural electrification and its annual per capita electricity consumption was only 170 kilowatt-hours (kWh), which was about one-fourth of the national average of 630 kWh. A key bottleneck was the limited capacity of state’s transmission and distribution (T&D) systems, which made it difficult to provide reliable power to consumers.
To help address the situation, the Asian Development Bank (ADB) approved a $200 million multitranche financing facility (MFF) for the Assam Power Sector Enhancement Investment Program in November 2009. The MFF was designed to support the government’s T&D investment program that aimed to, among other things, strengthen power transmission capacity to deliver reliable and affordable electricity, improve access to electricity, and enhance the efficiency and quality of power supply. It followed ADB’s assistance for the Assam Power Sector Development Program that supported sector reforms and contributed to significant aggregate technical and commercial (AT&C) loss reduction from 42.5% in 2003 to 35% in 2008. While the MFF was originally designed to have three tranches, a fourth was approved in November 2014.
Tranche 3, the focus of this report, was approved by ADB for a $50 million loan in November 2011. As with the previous tranches, its expected impact was a sustainable state power transmission subsector to support inclusive and low-carbon economic growth. Its intended outcome was enhanced quality and expanded electricity service delivery in Assam through improved technical, commercial, and financial performance and capability of the power sector utilities. Its planned outputs were: (i) improved access to power (distribution) through the construction of new distribution lines and substations, augmentation of existing substations, and other distribution system improvement activities under electrification programs; and (ii) energy efficiency enhancement (distribution loss reduction) through refurbishing existing substations and introducing new technologies to reduce distribution losses.
At completion, the project achieved all its output targets. Under output 1, 29 new substations were constructed, 14 existing ones were augmented, and the distribution network capacity was increased through about 600 kilometers (km) of new 33 kilovolt (kV) lines and about 300 km of new 11 kV lines. Under output 2, four existing substations were renovated and modernized, 30 existing distribution transformers were converted to high voltage distribution systems, and 70 km of aerial bundled cables were installed. However, the works, divided into nine geographic subproject areas, were physically completed only in 30 January 2018, well beyond its original completion date of 30 June 2014. The long delay was caused by the termination of one subproject in the middle of civil works due to poor contractor performance. The subproject was eventually completed through counterpart funding.
Attainment of all the outputs targets enabled the project to achieve/overachieve its outcome targets. Assam achieved 100% village and household electrification rate as of 2019. The project contributed to reducing system losses from 35% in 2008 to 17.64% in 2018, compared to the target of 19%. The outcome was achieved with contributions from tranches 1 and 2’s transmission improvement component, which were implemented in parallel with the tranche 3 project. Assam’s AT&C loss reduction was supported collectively by both transmission and distribution subprojects in all the tranches. Electrification also benefited from investments under the state government’s program for rural electrification.
At the impact level, the project was able to meet its targets for the state’s power sales and economic growth. Compared with the baseline of 2,650 gigawatt-hours (GWh) in 2008, Assam’s power sales increased to 8,921 GWh in 2018 – and this met growing electricity demand. Assam’s net state domestic product per capita also increased from ₹18,598 in 2009 to ₹57,042 in 2018.
At appraisal, the government of Assam and the Assam Electricity Board (ASEB) were designated as executing agencies (EAs). But under the state power sector reform process, the government of Assam formally dissolved and reorganized the ASEB, and in March 2013, transferred ASEB’s functions to three entities: the Assam Power Distribution Corporation Limited, the Assam Electricity Grid Corporation Limited (AEGCL), and the Assam Power Generation Corporation Limited. Since then, the AEGCL had served as the EA. The project management unit under the erstwhile ASEB continued to function as the coordinating agency.
