ADB approves Rs. 1233 cr loan to modernize, strengthen Sikkim power supply

GANGTOK,: The Asian Development Bank (ADB) has approved a $148.5 million (Rs. 1233.00 crore) loan for strengthening, modernization and climate-proof distribution system to enhance reliability, quality and resilience of electricity supply in Sikkim.

The total value of the Sikkim Power Sector Development Project is $ 186 million (Rs. 1544.00 crore) which includes State counterpart funding of 20% of the total project cost. Further, as Sikkim falls under the special category States, the above approved loan is a grant for Sikkim, with only 10% of it being loan on a long term repayment basis, informs State Power department on Monday.

It was informed that the project consists of 13 packages out of which the global tender formalities for the package 2: 11KV Distribution Network Development on turnkey basis - 5 Lots of USD 50.81 million (Rs. 406.48 crore) has been already completed. The global tender process for the package 1: 66/11KV substation renovation and modernization on turnkey basis USD 8.71 million (Rs. 69.68 croe) and package 3: LT Network Renovation & Augmentation on turnkey basis - 5 Lots for USD 33.31 million (Rs. 266.48 crore) is ongoing.

This exercise is mandatory to comply with the Ministry of DEA's project readiness checklist of having tendered at least 40-50% of the project value before loan negotiations which took place on 14th March 2024, said the Power department.

“This project fully supports State government's vision for all initiative, ensuring round-the-clock uninterrupted access to quality electricity for households, industries, businesses, and the public. Additionally, it synergizes with the Government of India's revamped distribution sector scheme by enhancing the distribution network, thereby boosting operational efficiency and financial sustainability of the distribution business in the State,” said Power PCE-cum-secretary TT Lepcha.

“The project will facilitate the efficient transfer and integration of renewable energy into the distribution system and provide improved access to electricity in rural areas and businesses, thereby increasing economic opportunities, ensuring productivity, and improving living conditions,” said the Power PCE-cum-secretary.

As per the department, the project will upgrade and modernize Sikkim's power distribution system by upgrading it with approximately 770 kilometres of climate-resilient medium-voltage underground and/or covered conductors. Additionally, it will replace 580 km of aging and low capacity bare conductors with new ones to increase distribution network capacity. It will upgrade 26 existing power substations including the installation of a supervisory control and data acquisition system, install 15,000 units of public street lighting in remote areas, and conduct electricity conservation and safety awareness programs in 28 villages.

As per ADB's release from Manila, they will help develop a financial sustainability strategy and a plan to establish Sikkim's Power department as an independent entity, aimed at enhancing the financial sustainability of the electricity sector.

Additionally, it will assist Power department in formulating a power distribution master plan, integrating geographic information systems and distribution system modeling, establishing a real-time monitoring control center to enhance power management, and devising a strategy for gender equality and social inclusion.

“The project will enhance the livelihoods of a minimum of 1,100 women, comprising self-help groups, producer groups, and individual businesses, through the installation of tailored renewable energy systems and improving their vocational skills. Additionally, it will deploy solar energy systems and energy-efficient electrical equipment in 24 primary health care sub-centres to enhance the capacity of rural health care facilities to offer inpatient treatments, especially during the winter months,” the Power department said.