In 2004, the Government of India set the target of installing an additional 100,000 megawatts (MW) of generation capacity to provide electricity access to all households by 2012. Without improving the national transmission grid, transmission bottlenecks could worsen with increased generation capacity. Additionally, open transmission access and the development of a national market for power trading, as provided under the Electricity Act, 2003, were significant policy developments that required a robust and reliable transmission grid to ensure smooth power flow in the whole power system. Toward this outcome, the Power Grid Corporation of India Limited (POWERGRID) developed the National Transmission Development Plan (NTDP) with investment requirements of $12.6 billion up to 2012.
To help meet NTD ’s substantial funding requirements, the Asian Development Bank (ADB) approved in December 2004 the Power Grid Transmission (Sector) Project loan of $400 million to POWERGRID, with India as guarantor. The project’s expected impact was to provide adequate and reliable power supply to meet the country’s demand for electricity. Its intended outcome was the strengthening and expansion of the national transmission grid, with transmission bottlenecks removed and losses reduced.
The original project outputs comprised 3 grid strengthening subprojects in the southern Indian states of Tamil Nadu, Andhra Pradesh, and Union Territory of Pondicherry. These subprojects were identified during loan processing. 7 additional subprojects, consisting of grid strengthening in Kerala in southern India, transmission capacity enhancements in the northern and western regional grids, and procurement of key supplies were approved in 2005−2007.
At project completion, a total of 1,258.2 kilometers (km) of transmission lines were installed, against a target of 667 km. New substations were built, and existing ones were augmented. Existing grid interconnections were also enhanced. With almost all outputs delivered as designed, the project was able to maintain the availability of the national transmission grid at 99.5% or greater, compared to a 99% target. It helped reduce transmission and distribution (T&D) losses from 30% in 2004 to 28.55% by 2012, against a target of 20%.
By increasing the availability and reliability of power supply, the project helped improve the quality of life and increase industrial productivity in the project sites. As it enables greater investments, the project is also expected to create more jobs and contribute to poverty reduction in the beneficiary states.
Project completion was extended twice from December 2009 to March 2012. This was necessitated by the delayed completion of most subprojects caused mainly by delays in the implementation of the associated central sector generation projects. In one subproject though, a rebid of certain works and severe right of way issues, added to the delay.
The project cost estimate at appraisal was $568.0 million; after the approval of additional subprojects, this was raised to $653.2 million. At completion, the total cost was $602.2 million, $400.0 million of which was financed by the ADB loan and the rest by POWERGRID.
ADB’s South Asia Department rated the project successful. POWERGRID, the executing agency, fielded several of its headquarters staff to take charge of project implementation.
