Mumbai: Power Grid Corporation of India Ltd has signed loan agreements with the World Bank and the Asian Development Bank totalling $1 billion.

Power Grid signed a $600 million on loan agreement with the World Bank on 28 March. Power Grid Chairman R P Singh signed the agreement, in the presence of officials from the finance and power ministries. He Government of India has extended guarantee for this loan.

The loan will be utilized to fund a basket of the Power Grid's transmission projects during XI plan, which shall strengthen the transmission system in the power deficits regions of India and also enhance the inter-regional power transmission capacity in the country. Under the agreement, Power Grid shall implement HVDC terminal stations at Balia in Uttar Pradesh and Bhiwadi in Rajasthan along with inter-regional and grid strengthening schemes for formation of strong and vibrant National Grid.

The union ministry of power has accorded high priority to the development of power sector. It has set an ambitious task of providing power to all by 2012. Massive resources are required to carry out the expansion plan and meet the targets. Towards this, Power Grid has not only tapped domestic markets, but has also been arranging funds from multilateral funding agencies.

Power Grid also signed a loan agreement with Asian Development Bank (ADB), for $400 million. The loan is part of ADB's newly introduced facility called Multi-tranche Financing Facility (MFF), which is based on time-sliced approach under which loan assistance can be availed in number of tranches depending upon funding requirement. This is a unique feature in itself. A framework financing agreement (FFA) for MFF had been signed with ADB for $600 million. The MFF loan will be drawn in two tranches, of which this loan of $ 400 million constitutes first tranche.

The ministry of power has accorded high priority to the development of power sector. It has set an ambitious task of providing "Power to all by 2012". Massive resources are required to carry out the expansion plan and meet the targets. Towards this, tPower Grid has not only tapped domestic markets, but has also been arranging funds from multilateral funding agencies. The signing of this loan of $400 million between the company and ADB is a major milestone in this direction.

The loan will be utilised to finance part of the fund requirement of the Company's projects, namely (i) ±800kV high voltage direct current (HVDC) lines under "North Eastern - Northern / Western Region Interconnector-I Project" and (ii) 800kV High Voltage Alternating Current (HVAC) Substations under "Upgradation of Transmission Capacity from Uttarakhand Project".

The identified transmission projects involve the latest technology of around 800kV HVDC bipole lines and gas insulated substation at 800kV level. North Eastern - Northern / Western Region Interconnector-I Project involves 1800 km long and 800kV HVDC 6000MW bipole lines from Biswanath Chariyali in Assam of Northeastern Region to Agra in western part of Uttar Pradesh of Northern Region to facilitate transmission of power from Northeastern Region and Sikkim / Bhutan to power deficit regions like Northern and Western Regions.

Upgradation of transmission capacity from Uttarakhand Project involves transformation capacity addition of 5000 MVA, and will facilitate transmission of hydro power generated from Tehri valley to Northern Region constituents.