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World Bank Funds Power Assistance to Rajasthan

The World Bank will provide US$180 million to the State of Rajasthan to improve the efficiency of its power sector.

NEW DELHI, India – The Rajasthan Power Sector Restructuring Project will provide technical assistance to strengthen the management capacity of the transmission company, advance the privatization of the distribution firms, and promote initiatives in small-scale power generation and renewable energy production for remote locations. The State Government wants to improve its power sector as a key element of broader reforms to boost development. It recently passed legislation to establish an independent regulatory commission and to separate the state power monopoly into five corporate entities. “With dispersed communities in this predominantly desert state, Rajasthan’s power utilities will need to become more flexible and responsive to meet different power needs of rural consumers,” explains task leader Magdalena Manzo. “Some of the distant communities which are not connected to the power grid may be best served by alternative power sources such as solar.” Ninety percent of villages in the state are connected to the grid, but 60 percent of homes do not have electricity. Inefficiency in management means that 380,000 applications for electrical connections are on file, with some having waited for 12 years. Improvements under the World Bank loan will help the government meet its target of extending power to 750,000 more customers. They will also encourage inflow of private investment and coordinate efficiency and demand-side management efforts with other organizations such as the U.S. Agency for International Development. The $180 million loan is provided by the International Bank for Reconstruction & Development (IBRD), and has 20 years to maturity. Total project costs are $267 million, with the remaining funding to be contributed by the Government of Rajasthan, local financial institutions and USAID.