ADB Approves USD 200 Million Power Sector Loan to Nepal

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ADB Approves USD 200 Million Power Sector Loan to Nepal

June 29: The Asian Development Bank (ADB) has approved a USD 200 million concessional loan to improve power supply and distribution systems in Nepal.

The Manila-based international lender in a presss statement said that the project will finance, among others, the reinforcement and modernization of the power supply system in Kathmandu Valley, Bharatpur metropolitan area of Chitwan district in Bagmati Province and Pokhara of Kaski district in Gandaki Province, where supply interruptions are frequent and prolonged. “The project also aims to support Province 2, where the quality of electricity supply is poor and about 20 percent of households are still without access to the national grid,” reads the statement.

According to ADB, Nepal has made significant progress in electricity supply after years of chronic power shortages. However, its power transmission and distribution systems need further strengthening to increase network capacity, improve quality and reliability, and remove delays between generation hubs and load centers.

 “The project will help sustain Nepal’s improved electricity supply momentum over the past two years. This will facilitate meeting future demand from commercial and industrial activities as well as from communities, particularly women, who can now benefit from electricity-based enterprises and focus on productive economic and social activities,” the statement quoted ADB Principal Energy Specialist Jiwan Acharya as saying. “It is also very timely because the project will create employment opportunities for skilled and unskilled labor during the construction phase as the country adopts measures to mitigate the socioeconomic impact of the coronavirus disease (COVID-19) pandemic.”

According to the statement, complementing ADB’s loan, the Government of Norway is providing a USD 35 million co-financing grant for the installation and upgrading of power distribution networks in Province 2 and various substations to evacuate hydropower in the country. “In addition, it is providing a USD 5 million technical assistance grant for capacity development of the Nepal Electricity Authority to ensure that gender equality and social inclusion are strengthened, and new technologies are used to make electricity infrastructure resilient,” informed ADB.

The project is aligned with the South Asia Subregional Economic Cooperation programme on intraregional power trade through cross-border power exchange. The upgrading of substations in Khimti, Barhabise, and Lapsiphedi to 400 kilovolts will facilitate cross-border power exchange with India.

“ADB and other development partners have been engaged in Nepal’s power system reform efforts, including the approval of the Nepal Electricity Regulatory Commission Act of 2017, which created the Electricity Regulatory Commission as an independent regulatory body with respect to tariff-setting and consumer protection,” reads the statement.

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