The World Bank has approved a $600 million loan to the Indian government-run power transmission company, Power Grid Corporation of India, to strengthen its electricity transmission system.
Announcing the loan backed by Government of India guarantee, the bank said in a statement that the Fourth Power System Development Project would aim to reduce transmission losses and cut the cost of energy through further investments in its systems.
The project is part of the bank's long term partnership with Power Grid, initiated when the firm was formed in 1989.
"Despite a booming economy, India's growth potential is constrained by inadequate electricity services and limited power generation and supply infrastructure... The power sector has improved in recent years, albeit in an environment where demand for electricity continues to outstrip supply," the Bank said.
The Bank has made three direct loans to Power Grid since 1993. During this period, the company has nearly tripled its transmission network, its assets have grown more than eight-fold to $7.3 billion and revenues have increased more than six times to over $1 billion, it said in a statement.
"India's policy reforms in the power sector are beginning to pay off," World Bank Country Director (India) Isabel Guerrero said. "The sector's financial performance is improving and more and more villages are being electrified...This project, by strengthening transmission networks within and between regions, will enable more power to reach the
people across the country" she added.
