The Asian Development Bank (ADB) and the government of India have signed a $300 million loan to upgrade rural power distribution networks to provide reliable electricity supply to consumers in the state of Uttar Pradesh.

The signatories to the tranche 1 loan for Uttar Pradesh Power Distribution Network Rehabilitation Project were additional secretary to the department of economic affairs in the ministry of finance, C. S. Mohapatra, who signed for the government of India, and ADB India resident mission country director Takeo Konishi, who signed for ADB.

After signing the loan agreement, Mohapatra said that upgrading the distribution network will help improve the quality and reliability of electricity supply, reduce the aggregate technical and commercial (ATC) losses, and restore the financial sustainability of the rural electricity supply in the state.

“The project will establish separate feeders for electricity supply to agriculture and residential consumers to promote better rationing and utilisation of unmetered power, strengthen financial management of the state power distribution entity, and improve bill collection in rural areas through community engagement involving the women’s self-help groups,” said Konishi.

Overall, the $430 million multitranche financing facility (MFF) approved for the project constituting two tranches, envisages conversion of 65,000 km of rural low-voltage distribution lines from bare conductors to aerial bundle conductors (ABC) to create a robust distribution network that will benefit an estimated 70 million people in 46,000 villages.

The feeder separation network to be established over 17,000 km for agriculture and domestic consumers will facilitate the use of solar energy to meet the agriculture demand, increase in electricity supply duration to rural residential consumers, and energy and water conservation. In addition, the project will improve the gender inclusivity, corporate governance, and financial management capacity of Uttar Pradesh Power Corporation Limited.

To improve bill collection, the project will pilot engaging rural women through women’s self-help groups as community collection agents, which will also help increase their family income.

The MFF is complemented by a $2 million technical assistance (TA) grant from ADB’s TA Special Fund and the Japan Fund for Poverty Reduction to strengthen the gender inclusivity and institutional capacity building of Uttar Pradesh power sector.