New Delhi, Feb 23 (IANS): India and the Asian Infrastructure Investment Bank (AIIB) on Tuesday signed a $304 million loan agreement for the Assam Intra-State Transmission System Enhancement Project to improve reliability, capacity and security of the power transmission network in the northeastern state.

The project aims to strengthen Assam's electricity transmission system by constructing 10 transmission substations and laying transmission lines with the associated infrastructure. The project will also upgrade 15 existing substations, and transmission lines and existing ground wire to optical power ground wire and provide technical assistance to support project implementation.

The programme would strengthen the existing intrastate transmission network of Assam by augmenting it with newer networks to achieve affordable, secure, efficient and reliable 24X7 power. This would, in turn, bring Assam closer to ensuring long-term sustainability of its electricity supply, a Finance Ministry statement said.

Assam currently witnesses substantial energy and peak demand deficits. One of the main reasons for its power-deficit scenario is congestion of the electricity distribution and transmission networks. The Assam Electricity Grid Corporation Ltd (AEGCL), the sole transmission utility in the state, is responsible for the operation, maintenance and development of the transmission system in the State.

AEGCL currently operates 66 substations with 6,882 megavolt-ampere capacity, and its transmission network comprises 5,701 circuit km of transmission lines.

The project would improve the transmission network constraints and congestion in the state.

The total estimated cost of the project is $365 million, of which $304 million will be financed by the AIIB while the counterpart funding from the state government is $61 million. The $304 million loan from the AIIB has a 5-year grace period and a maturity of 24 years.