The Nepal Electricity Authority (NEA) has secured Rs 72.93 billion (US$ 537 million) to expand, modernize, and improve the country’s electricity transmission and distribution system. This investment aims to ensure a reliable and high-quality power supply while strengthening cross-border electricity trade.
The Asian Development Bank (ADB) will provide a concessional loan of $311 million (Rs 42.24 billion) and a grant of $30 million (Rs 4.7 billion). The European Union will contribute a grant of $22.6 million (Rs 3.6 billion), and the Government of Norway will provide $31 million (Rs 4.21 billion). Additionally, $10 million (Rs 1.35 billion) will come from the Strategic Climate Fund, and the Government of Nepal will allocate $132.4 million (Rs 17.98 billion) to implement the project.
The investment will be used to construct 290 kilometers of transmission lines, establish five new substations, and upgrade two existing ones under the ADB’s South Asian Subregional Economic Cooperation (SASEC) Electricity Transmission and Distribution Strengthening Project. Other planned projects include the installation of smart meters to replace single-phase meters in the Kathmandu Valley, the development of a Supervisory Control and Data Acquisition (SCADA) system to automate distribution substations, and the construction of a national transmission line in Karnali Province to upgrade the regional distribution system.
The Government of Nepal, ADB, and the NEA signed the agreement for concessional loans and grants on Friday. The projects will be implemented by the NEA.
NEA Executive Director Kulman Ghising highlighted that the resources would help improve the domestic power supply system, establish infrastructure to support regional electricity trade, and digitize distribution networks. Ghising emphasized that the initiative would address consumer complaints regarding power outages and accelerate infrastructure improvements for reliable, high-quality electricity.
Key projects include the construction of a 160-kilometer 400 kV double-circuit transmission line connecting Nawalparasi-based New Butwal Substation to Lamahi via Rupandehi, Kapilvastu, and Arghakhanchi, alongside a 400 kV gas-insulated substation in Lamahi at a cost of $203 million. Ghising said that the NEA currently uses a 132 kV transmission line from New Butwal Substation, which needs to be upgraded to meet the growing demand as well as to accommodate electricity generated by new projects.
A 400 kV substation in Nijgadh, Bara, under the Hetauda-Dhalkebar-Inruwa transmission line, will supply power to industries in the Bara-Parsa Industrial Corridor. This project ensures quality supply of electricity to both existing industries as well as those in the offing to meet the industries’ demand.
This project is partially funded by a concessional loan from the Exim Bank of India and $85 million from the ADB for the Nijgadh-Parwanipur transmission line and substation.
Additional initiatives include the Okharpouwa-Tinpiple 220 kV transmission line and the Tinpiple substation, projected to meet Kathmandu Valley’s electricity demand of 3,100 MW by 2050. The Dailekh-Jumla 132 kV transmission line and Jumla substation will cost $35 million, while $23 million will upgrade Karnali Province's distribution system.
Arnaud Cauchois, ADB Country Director for Nepal, stated that the assistance would eliminate grid limitations, enabling Nepal to meet its growing energy demand and promote green energy exports. Cauchois noted that the investment aligns with Nepal’s transmission and distribution master plan, enhancing the ability to transmit electricity for domestic use and cross-border trade while ensuring equitable access across provinces.
The NEA aims to implement these plans promptly, leveraging the funds to build infrastructure, reduce socio-economic disparities, and promote reliable electricity access nationwide.
