This is a short summary of the Implementation Completion Report (ICR) of a recently-closed World Bank project. The full text of the ICR is available on the Bank’s website. To access this document, go to www.worldbank.org/reference/ and then opt for the Documents & Reports section.

Second Powergrid System Development Project

Approval Date: 03 May 2001 Closing Date: 30 June 2006 Total Project Cost: US$M 2,118.34 Bank Financing: US$M 506.62 Implementing Agency: Powergrid Corporation of India Limited Outcome: Highly Satisfactory Risk to Developement Outcome: Low or Negligible Bank Performance: Highly Satisfactory Borrower Performance: Highly Satisfactory

Context
In the first half of the 1990s, power system in India grew steadily and generation capacity reached 86,000 MW. However, demand continued to outstrip supply, with shortages estimated at 10 percent of energy and 20 percent of peak capacity, and projected to grow due to lack of sufficient investments.

Therefore, the Government of India (GOI) initiated a comprehensive reform program. The Power Grid Corporation of India (POWERGRID) was established to move large blocks of power from central generating stations and surplus from state electricity boards, if any, to load centers with reliability, security and economy.

• To assist India in restructuring the power transmission sub-sector, improve coordination in power system operations, and promote inter-regional and inter-state power trading through regulatory, tariff and institutional reforms;
• To support POWERGRID’s institutional development and promote satisfactory financial and commercial performance;
• To assist POWERGRID in the development of modern system coordination and control facilities and reinforcement of its transmission system towards a national grid;
• To support POWERGRID in the facilitation of private investment in the power sector and in its possible diversification into telecommunications.

• System Coordination and Control;
• Transmission System Development
• Technical Assistance for Institutional Development;
• Completion of on-going Bank-financed Projects;
• Additional Investment Projects.

The first ever public-private joint venture Project in transmission in India – the Powerlinks Tala-Delhi transmission line was commissioned under this Project

The completion of the regional transmission interconnections have increased the power transfer capacity between the regions – inter-regional capacity increased from 4359 MW in 2001 to 11500 MW in 2006, and power exchange increased from 8492 MU in 2001 to 34816 MU in 2006. It also enhanced the system reliability – trippings per line per year reduced from 5.5 in 2001 to 3.5 in 2006, and system availability increased from 98.85 percent in 2001 to 99.64 percent in 2006. A major milestone in the grid operation was achieved by synchronization of the four of the five electrical regions of the country (except southern region), thereby integrating them into a single grid operating at a common frequency.

The first-ever public-private joint venture project in transmission in India – the Powerlinks Tala-Delhi transmission line has been commissioned. Five other joint-venture MOUs have been signed.

POWERGRID has installed and commissioned a telecommunication network of about 19500 km covering more than 61 cities of which a total of 9218 km Optical Fibre Ground Wire was financed by this loan. In addition, it has also provided coverage to many remote areas of India where private providers are not willing to invest.

The time-slice lending approach is an appropriate mechanism for lending to large power utilities, such as POWERGRID, with large investment needs. This helps provide flexibility in financing priority investment projects and to respond to changes as the electricity markets evolve.