In February 2007, the Asian Development Bank (ADB) approved a $620 million multitranche financing facility (MFF) for the Madhya Pradesh Power Sector Investment Program. The program was to support a time slice of the state government’s roadmap for upgrading and modernizing transmission and distribution systems, building on the successful unbundling of the state electricity board into separate independent entities under an earlier ADB-financed project. While improving the physical facilities for the delivery of dependable and affordable power, particularly to rural areas, it also aimed to assist the newly-formed entities to become financially independent over time.
The program comprised initially of five projects but, at government request, was expanded to include a sixth one focusing on strengthening the operational and financial management of the state’s 3 distribution companies (DISCOMs) and the Madhya Pradesh Power Management Company Limited (MPPMCL) which, since 2012, has managed the purchase of electric power from various generators for resale to the DISCOMs. This report covers the entire investment program and project 6, approved by ADB in December 2010 for a loan of $69 million. Project 6 also included the extension of the rural electrification system in DISCOM-central (DISCOM-C).
By completion, the investment program substantially achieved its transmission expansion targets. It exceeded most of its distribution system enhancement targets in DISCOM-east (DISCOM-E). However, due to the availability of non-ADB financing, which could not have been anticipated at appraisal, it just filled in the gaps and thus failed to achieve most of its appraisal targets in DISCOM-C. In DISCOM-west (DISCOM-W), it completed most of its planned physical works, exceeding the targets in some, but backing off from village electrification because of government decision to use its own resources.
System enhancements in DISCOM-E and DISCOM-W were buttressed by the installation of supervision control and data acquisition and completion of enterprise resource planning under project 6. For DISCOM-C, most of project 6’s planned works were also delivered; a geographic information system for un-surveyed towns and villages was completed; and consumer data were updated. Furthermore, project 6 provided MPPMCL an automated integrated business solutions system with related services and staff training to help manage power consumption projections, purchases, and sales to DISCOMs, as well as human resources.
Despite initial growing pains, the investment program thus achieved its intended outcomes. Transmission capacity has been expanded. The DISCOMS have cut their losses in half and increased their revenues by over 100%. By project completion in 2015, they were progressively achieving full financial sustainability, and power was being provided 24/7 to all urban areas and 10 hours/day for irrigation. Energy deficits had been eliminated by 2013 and a surplus of 1,310 gigawatt-hours was reported for 2014.
Overall, better quality and reliable power supply helped the state gross domestic product to grow at an average of 8.5% per annum in 2008−2012, compared to a 6% appraisal target. Higher agricultural productivity and decreased energy costs were also being realized.
The DISCOMs and MPPMCL were the project 6 executing agencies. They were joined by the Madhya Pradesh Transmission Company Limited in executing the investment program.
