AIIB approves $304m loan for India's Assam power transmission project

Out-Law News | 02 Mar 2021 | 1:29 am |

The Asian Infrastructure Investment Bank (AIIB) has approved a $304 million loan for an intra-state transmission system enhancement project in Assam.

The total cost of the project is $365m, of which $304m will be financed by AIIB. The Assam state government will fund the rest. The loan will be made by April 2026, with a loan term of 24 years.

The plan is to build 10 new high voltage grid substations and transmission lines, to upgrade 15 existing substations, transmission lines and existing ground wire to optical power ground wire (OPGW) and to provide technical support.

Assam Electricity Grid Corporation Limited (AEGCL) is responsible for the operation, maintenance and development of the transmission system in the State.

John Yeap of Pinsent Masons, the law firm behind Out-Law, said, “As nations move forward with their net zero agenda, we are likely to see further need for investments in transmission so as to meet the challenges of absorbing the likely increase in intermittent generation. This investment by AIIB, albeit some years out, will be important in upgrading transmission and distribution in the state to accommodate capacity growth in the system including from non-firm generation sources.”

It is reported that one of reasons for the power shortage in Assam is congestion in the distribution and transmission network.