Project Signing: World Bank Provides Support to Improve Electricity Supply in Haryana

Contacts:
In Delhi:
Sudip Mozumder
(91 11) 2461-7241
smozumder@worldbank.org

In Washington:  
Benjamin Crow
(202) 4735105
bcrow@worldbank.org

NEW DELHI, August 17, 2009 ─   A Loan Agreement of $ 330 million equivalent, for the Haryana Power System Improvement Project, was signed today by the representatives from the Government of India, the Government of Haryana and the World Bank. The signatories to the Agreement were Mr Anup K. Pujari, Joint Secretary, on behalf of the Government of India, Mrs. Jyoti Arora, Special Secretary, Department of Power, Government of Haryana and Mr Roberto Zagha, Country Director, World Bank, India. 

 Haryana has been a power deficit state for several years. With installed available generation capacity of 4,680 Mega Watt (MW), the power shortage ranges between 400-600 MW in off-peak hours and between 1,200-1,500 MW in peak hours resulting in a peak deficit of about 26-36 percent. Today, some of the critical issues facing Haryana’s power sector include rising electricity demand coupled with persistent shortages; low cost recovery through tariffs; rising government subsidies for supply of power; and limited capacity of service providers. The state is also grappling with the twin challenges of serving a growing and commercially vibrant urban and industrial customer base while also revitalizing the rural economy.  
 
The Haryana Power System Improvement Project aims to improve the availability, efficiency, and accountability of electricity supply in the state of Haryana through strengthening of transmission and distribution systems. The transmission component includes priority investments to increase electricity transfer capability and the institutional strengthening of HVPN (Haryana Vidyut Prasaran Nigam Limited). The distribution component constitutes the first phase of Haryana’s program to improve customer service, distribution efficiency, and accountability in its urban centers. Under this component, DHBVN (Dakshin Haryana Bijli Vitran Nigam) will strengthen the distribution networks in Gurgaon, Faridabad, and Charkhi Dadri by raising voltage levels, bifurcating overloaded feeders, building a new sub-station, and setting up customer care centers.
 
“From the actions it has already taken, Haryana is demonstrating a strong commitment to improve the availability, quality, and reliability of its power supply which is critical to the state’s economic development,” said Roberto Zagha, World Bank Country Director for India. “This commitment presents the opportunity to serve a large unmet demand from industry, commercial establishments, and urban households that have the ability and willingness to pay for good quality electricity services. These transmission and distribution investments, complementing the state’s generation expansion plans, will ensure high economic returns and significant welfare improvements for consumers - both urban and rural.”
 
Besides enhancing the physical capacity of the state’s transmission and distribution network, the project also aims to assist the power utilities to step up to address the new business challenges and support institutional development.
 
“This project provides an opportunity for the Bank to re-engage in the state power sector and contribute to the government’s investment program and institution development agenda. The project’s focus on governance improvements and capacity building of the state transmission and distribution utilities will help establish national benchmarks in customer service and operational efficiency,” said Sudeshna Banerjee, World Bank Economist and project task team leader. “The Bank also supports Haryana’s initiative to segregate agricultural and non-agricultural feeders which will not only enable a more accurate estimation of agricultural consumption and resulting subsidy levels, but also facilitate 24 hour power supply to agricultural households.”
 
The project will thus enable the state’s electricity transmission and urban distribution business – executed by the HVPN and DHBVN respectively – to become more efficient, cost-effective and responsive.
 
The loan from the International Bank for Reconstruction and Development (IBRD) has a 30-year maturity which includes a 5-year grace period.

 
******************

For more information on World Bank’s activities in India,
please visit: www.worldbank.org.in

For more project information,
please visit: http://www.worldbank.org.in/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=295584&menuPK=295617&Projectid=P110051