The EIB, which has also pledged funds for the Tanahu Hydropower Project, has agreed to provide €30 million for the power line project that is expected to connect about two dozen under-construction hydropower projects in the region.

Among the projects are Upper Sanjen, Lower Sanjen, Rasuwagadhi and Upper Trishuli-1, among others.

The Finance Ministry said the negotiations concluded at the meeting on July 22-24 in Kathmandu. “An agreement has been planned to be signed in September after the EIB board’s approval,” said Under-secretary Hari Pandey.

The government will receive the loan at floating interest rate. “As it is not a commercial loan,  the interest rate is expected to remain between 1-3 percent based on the loan release date.”

German state-owned KFW bank has also pledged a grant of €14 million, while the European Union has committed 2 million in grant, according to Pandey.

The total project cost is estimated at $65 million. The Nepal Electricity Authority (NEA) is expected bear deficit amount. “An agreement with KFW is also expected to take place in September,” said Pandey.

NEA has said Environment Impact Assessment, Social Impact Assessment, and land acquisition process are under-way. “We will now soon go for the procurement process,” said NEA Managing Director Mukesh Kafle.

The 220KV transmission line is a strategic project in the region given the linkage it will gives to under-construction projects and those signing the power purchase agreement (PPA) with the NEA.

Deputy Managing Director of the Transmission Directorate of the NEA, Kanhaiya Manandhar, said the transmission line would be able to carry more than 500MW of electricity of the region.