World Bank Approves $200 Million Funding for Himachal Pradesh Power Sector Reform

The Government of India, in collaboration with the World Bank, has secured a financial facility worth approximately Rs. 1600 Crore ($200 million) for the ‘Himachal Pradesh Power Sector Development Program’. The program aims to implement comprehensive power sector reforms in Himachal Pradesh, focusing on renewable energy integration. With the state’s equity contribution, the total program cost amounts to over Rs. 2000 crore ($262 million). The World Bank funding is expected to be available from August 2023 and will span a duration of five years until 2028.

Under the program, various initiatives will be undertaken, including improving the utilization of renewable energy resources, enhancing the reliability of the state’s grid at the transmission and distribution levels, and strengthening the institutional capacities of power utilities and agencies. Integrated resource planning will be promoted, allowing for comprehensive power sector planning. Demand response management will be piloted, and technical utilization of existing hydropower assets will be improved to facilitate integration with other renewable energy sources. Additionally, a single trading desk will be established to enable efficient trading of the state’s power, maximizing revenue from renewable balancing capacity.

The program also aims to install new solar generation capacities of approximately 200 MW through the Himachal Pradesh Power Corporation Limited (HPPCL) and Himachal Pradesh Energy Development Agency (HIMURJA). It will focus on strengthening the power network within the state, both in transmission by the Himachal Pradesh Power Transmission Corporation Limited (HPPTCL) and in 13 towns at the distribution level by the Himachal Pradesh State Electricity Board Limited (HPSEBL). Upgrading the systems of the State Load Dispatch Center (HPSLDC) will further enhance power demand and supply management, improving the transfer of power within the state.

The program also emphasizes strengthening the environmental and social systems applicable to the state’s power sector. Efforts will be made to enhance monitoring and evaluation of environmental and social aspects, including conducting detailed assessments based on existing norms, regulations, and studies. While the program does not entail new investments in hydropower, it will assist in developing uniform environment and social policies and procedures for power sector utilities and provide benchmarks for sustainable renewable energy development. Furthermore, it aims to encourage greater participation of women in the state’s power sector.

Negotiations for the loan were concluded between the Department of Economic Affairs, Government of India, the World Bank, and the Government of Himachal Pradesh on May 27, 2023. The World Bank Board approved the program on June 27, 2023, in Washington, and the agreement will be finalized in July 2023. The first installment of the funding is expected to be disbursed to Himachal Pradesh in August 2023.