Govt Inks USD100 million Energy Sector Reform Credit Deal with World Bank

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Govt Inks USD100 million Energy Sector Reform Credit Deal with World Bank

June 24: The government has signed a USD100 million Development Policy Credit (DPC) agreement with the World Bank Board today to improve the financial viability and governance of the energy sector and recover from the COVID-19 crisis. The World Bank in a press statement said that the agreement was signed by the Finance Secretary Sishir Kumar Dhungana and World Bank Country Manager for Nepal, Faris Hadad-Zervos.

According to the bank, the approved operation is the second in a series of three DPC operations to support key policy, regulatory and institutional reforms to unlock the economic potential of Nepal's energy sector. “These include measures to improve the financial viability of the Nepal Electricity Authority (NEA) as the sole off-taker; establish a regulatory framework that is autonomous, transparent, and accountable; achieve greater integration with the regional electricity market to ensure the optimal use of Nepal’s hydropower resource; and restructure NEA to empower provincial and local governments under the federal structure,” reads the statement

“We are thankful to the World Bank for the continued support to improve the quality of infrastructure and social-economic development in Nepal. The support made by the World Bank to enhance Nepal’s energy capacity will improve access to electricity as aimed by our plan and budget and also enhance the capacity of NEA,” the statement quoted finance secretary Dhungana as saying. He added that while Nepal has made important progress in the sector, addressing the immediate and long-term impacts of the pandemic is a key priority of the government to ensure the benefits are sustained over time.

According to the World Bank, Nepal’s energy sector made great strides with increased electricity generation, reduced system losses, and enhanced cross-border transmission capacity while putting an end to the nationwide power cut in the recent years. “Electricity is now available to 88 percent of the population. An independent electricity regulator, central to the sector’s reform agenda, has become operational. A newly proposed Electricity Bill will, among others, enable competition in electricity generation and establishing power trade as a licensed activity. With strong government commitment and effective management, NEA has reduced system losses, remained profitable for three consecutive years and has improved its financial performance,” the statement said.

“The World Bank is committed to support the government in strengthening the energy sector in Nepal during the crisis and for post-crisis recovery,” the statement quoted Faris Hadad-Zervos, World Bank Country Manager for Nepal as saying. He commented that this operation will help Nepal develop a reliable, affordable, and sustainable energy sector that supports poverty reduction and shared prosperity in the country.

 

 

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