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The Japan Bank for International Cooperation (JBIC) has signed ODA loan agreements totalling ¥66.950bn (US$582.4mn) with the Indian government and the Rural Electrification Corporation for pumped storage power generation, water supply and rural electrification projects in India. The projects will facilitate industrial development and poverty reduction.

The Purulia Pumped Storage Project (III) will construct the largest pumped storage power plant in India, with a capacity of 900MW, in the eastern state of West Bengal. JBIC’s loan of ¥17.963bn will be used for procuring power generation facilities, civil works and consulting services. This is the third and final loan that JBIC will provide for the project.

The project will relieve power shortages in the region – industrialisation has raised power demand by an annual average of 5-6% over the last decade and the area faces a shortage of 7% of total demand at peak times.

In Bangalore, JBIC is providing a loan of ¥28.358bn for the second phase of the Bangalore Water Supply and Sewerage Project (II-2). The project will expand water supply facilities and develop a sewerage system in the Bangalore metropolitan area. Water will be pumped from the Cauvery River located 100km southwest of Bangalore.

Local industry, as well as Japanese companies operating in the region, is expected to benefit. There is also a particular focus on developing a water distribution and sewerage network in the region’s slums. In this, JBIC is co-operating with Cities Alliance, set up by the UN Habitat, the World Bank and the US Agency for International Development (USAid).

JBIC has also signed a loan agreement totalling ¥20.629bn with the Rural Electrification Corporation for the Rural Electrification Project. The project will build a power substation and develop power distribution networks in Adhra Pradesh, Madhya Pradesh and Maharashtra. It will help supply electricity to 2.79mn households, contributing to the Indian government’s target of securing access to electricity for all households by 2009.

These loans form part of JBIC’s recently announced Fiscal 2005 ODA Loan Package for India. The package consists of 10 loan agreements totalling ¥155.458bn nine of which are with the Indian government and one with the Rural Electrification Corporation. Through these projects, JBIC is contributing to the Indian government’s policy of long-term poverty alleviation through economic growth.

Japan is increasingly focusing on India as a promising market for trade and foreign investment. Results of the JBIC FY2005 survey rated India as the second most promising country for investment after China.