Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry：India
Project：Odisha Transmission System Improvement Project
Loan Agreement：May 15, 2015
Loan Amount： 21,787 million Yen
Borrower：The President of India
2. Background and Necessity of the Project(1) Current State and Issues of the Energy Sector in India
With its recent fast-paced annual economic growth, energy consumption in India has
been increasing, which has made the country become the fourth largest energy
consumer in the world. However, energy supply has not met the energy demand. InFY2014 (April 2014 - March 2015), there are serious electricity supply shortages of
3.6% of total requirements, and 4.7% of peak demand. In addition, the high rate ofpower transmission and distribution losses (FY2010: estimated at 23.04% on anaverage for all of India) has become serious problems with respect to the power
supply.
(2) Development Policies for the Energy Sector in India and the Priority of the Project
In India’s Twelfth Five Year Plan for national development (FY 2012 to 2016), theGovernment has set a course of strong energy policies for the institutional and system
reform in power sector, development of electrical power resources, powertransmission and distribution network and rural electrification. Odisha Transmission
System Improvement Project (hereinafter referred to as “the Project”), the objective of
which is to strengthen transmission system throughout the state, contributes to
Odisha’s efforts and plans.
(3) Japan and JICA’s Policy and Operations in the Energy Sector in India
In Japan’s Country Assistance Programs for India (May 2006), “Promotion ofEconomic Growth” has been identified as one of the priority areas. Accordingly, in its
Country Analysis Paper (March 2012), JICA has set “Promotion of Sustainable Growththrough the Development Assistance to the Infrastructure” as a priority area. In orderto deliver a stable and efficient power supply, strengthening the power supply capacity
as well as the power transmission capacity is necessary. JICA’s primary assistanceincludes the establishment of highly efficient power supply facilities (power stationsand transmission/distribution systems), the improvement of efficiency of the existingold power facilities, and the reduction of transmission/distribution losses, which are allconsistent with the objective of the Project. As for the past Japanese ODA loan
projects in the energy sector, there were 78 projects totaling 1,241.2 billion yen as ofApril 2015.

(4) Other Donors’ Activity
The World Bank and the Asian Development Bank (ADB) have been supporting not
only the power sector reforms in India, but also projects related to the establishment oftransmission and distribution systems, strengthening of the capacity of state electric
power corporations, development of hydroelectric power generation, and energy
efficiency improvement. The ADB is currently formulating a distribution andtransmission project in the coastal areas of the state of Odisha with Odisha PowerTransmission Corporation Ltd (OPTCL), so as to mitigate potential damages fromcyclones.
(5) Necessity of the ProjectWith a population of approximately 42 million people, Odisha in eastern India is one of
the richest states in mineral resources, having approximately 17% of the country’s
total mineral reserves, and has extensive forests that yield teak, bamboo and othernatural resources. Industries based on those resources have developed, rapidly inrecent years, and a substantial increase in the power demand is expected goingforward. Under these circumstances, by implementing and improving transmission
systems, the Project aims to achieve stabilization of the power system in Odisha,
reduction of the transmission loss rate, and stable power supply. Therefore, the aim of
the Project is in line with the development policy of the Government of India as well as
the foreign aid policy of the Government of Japan and of JICA. Consequently, JICA’s
assistance to the Project is necessary and relevant.
3. Project Description(1) Project Objective
To reduce overloading of transmission system for enhanced reliability of power supply
and deliver additional energy generated at new power plants in the state of Odisha bystrengthening transmission system throughout the state, thereby promoting economic
growth in the state and the Eastern region of India.
(2) Project Site/Target Area
The entire state of Odisha(3) Project Component(s)1) Procurement of materials and equipment needed for new construction andenhancement for transmission lines (400kV, 132kV, 33kV, total of approximately 971km), including low-loss conductors (163 km circuit length), and civil work (Internationalcompetitive bidding)2) Procurement of materials and equipment for construction of 18 new substations
and, including a Gas Insulated Switchgear substation, and civil work (Internationalcompetitive bidding)3) Consulting services (e.g. basic design, tender preparation and projectsupervision) (Short list)(4) Estimated Project Cost (Loan Amount)
29,172 million Yen (Loan Amount：21,787 million Yen)
(5) Schedule
April 2015 - January 2021 (70 months). Project completion is scheduled inJanuary 2020 for commencement of commercial operation.
(6) Project Implementation Structure1) Borrower：The President of India
2) Executing Agency：Odisha Power Transmission Corporation Limited3) Operation and Maintenance System：same as 2)(7) Environmental and Social Consideration/Poverty Reduction/Social Development
1) Environmental and Social Consideration① Category B② Reason for Categorization: The Project does not include sensitive sectors,characteristics or areas described in the Guidelines for Environmental andSocial Considerations (issued in April 2010), therefore, the adverse impact of
the Project is considered to be moderate.
③ Environmental Permit: The Environmental Impact Assessment (EIA) report is
not required for the Project under the country’s domestic laws.
④ Anti-Pollution Measures: During construction, appropriate mitigation measures
will be taken to reduce the dust by spraying water and covering freight carriers
and for vehicles and heavy machinery while performing the works.
⑤ Natural Environment: The project areas are not located in or around any
environment-sensitive areas such as national parks, and thus adverse impact
on the natural environment caused by the Project is expected to be minimal.
None of the sites for the installation of transmission lines or construction ofsubstations are located in reserved forests, thus there is no problem in thisregard.
⑥ Social Environment: Out of 85.31 hectares (ha) of land that the Project requires,2.27 ha (1 substation out of 18 still needs land acquisition) owned by Private isin the process of being acquired with the reacquisition price under the domestic
procedures of India as well as compensation policy enacted by the Executing
Agency. The land acquisition is scheduled to be completed by the time ofconstruction begins. The Project involves no resident resettlement.
⑦ Other/Monitoring: During construction, the Executing Agency will monitor air
quality, water quality, noise, and vibration. After the completion of the Project,
the Executing Agency will monitor the waste, discharged water, solid waste, airquality, noise, and other parameters, if any.
2) Promotion of Poverty Reduction: None

3) Promotion of Social Development (e.g. Gender Perspective 、 Measure for
Infectious Diseases Including HIV/AIDS, Participatory Development,
Consideration for the Person with Disability etc.) :None(8) Collaboration with Other Donors: The ADB is currently formulating a distribution
and transmission project with OPTCL with the project cost of approximately Rs.
10,000 million (Rs. 2,300 million for Transmission and Rs. 5,850 million forDistribution). There is no overlap with ADB’s project scope, but the collaboration inintroducing items with new specification can be expected because the ADB plans toinclude underline cables as part of its subprojects.
(9) Other Important Issues: The Project aims to improve energy efficiency by reducing
transmission losses, therefore, it will contribute to controlling Greenhouse Gas (GHG)
emissions.
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicator)1
Indicators

Baseline(2013)

Target (2022)(2 Years after ProjectCompletion)
49.00
50.08
38.27
36,3403.65
2,520.0
6,410.0
400.0
5,972.0
521.23
6,319.33
5,835.37

400kV/220kV
Availability Factor（%） 220kV/132kV
132kV/33kVElectricity Supply（GWh）
22,865
3.79
Transmission System Losses（%）
400kV/220kV
1,890.0
Installed Transformer 220kV/132kV
5,290.0
Capacity （MVA）
220kV/33kV
280.0
132kV/33kV
5,657.0
Transmission Line
400kV
518.23
Length （span length）
220kV
5,730.33
132kV
5,455.91（km）
2) Internal Rate of Return
Based on the conditions indicated below, the Economic Internal Rate of Return(EIRR) for the Project is 14.9%, and Financial Internal Rate of Return (FIRR) is9.0%.
【EIRR】
Cost ： Project cost (excluding tax and duties), operation and maintenanceexpenses
Benefit：Increase in transmission tariff revenue by the enhanced transmission
system, Energy saving due to decreased transmission losses
Project Life：35 years
1

In the column of available factors of 400kV/220kV and 132kV/33kV, only representative ones
among 18 subprojects are shown.

【FIRR】
Cost：Project cost (including tax and duties) and maintenance expenses
Benefit：Increase in transmission tariff revenue by the enhanced transmission
systemProject Life：35 years(3) Qualitative Effects: Improvement in power supply situation by the energy efficiency,Mitigation of climate change, Improvement of the delivery of additional energy
generated at new power plants in the state and the Eastern region of India.
5. External Factors and Risk Control
Deterioration of political and economic situation and natural disasters in India and thearea around the Project area
6. Lessons Learned from Past Projects(1) Evaluation Results of Similar Projects
From the ex-post evaluation of previous energy project named “Anpara Power
Transmission System Project (1) (2)”, there was a lesson learned for introducing
items with new specification, such as a super-high voltage transmission lines, it isnecessary to design a realistic implementation plan, with sufficient study ofdifficulties and obstacles in administrative approval process that did not occur withthe old specifications.
(2) Lessons To Be Applied to the Project
Based on the lessons described above, JICA will appoint consulting services for
those projects where advanced technologies are being introduced such as
Low-Loss conductors and outdoor gas-insulated switchgear (GIS) substations toassist OPTCL for their smooth implementation of basic design, tender preparationand project supervision. As for the environmental clearance, JICA will pay attention
to get the forest clearance without delay.
7. Plan for Future Evaluation(1) Indicators to be Used
1) Substation’s Availability Factor (%)2) Electricity Supply (GWh)
3)
4)
5)
6)
7)

Transmission System Losses (%)
Installed Transformer Capacity (MVA)
Transmission Line Length (circuit km)
Economic Internal Rate of Return (EIRR) (%)
Financial Internal Rate of Return (FIRR) (%)(2) Timing: Two years after project completion