The Asian Development Bank (ADB) has agreed to provide $152 million (approximately Rs15.46 billion) in loan and grant to expand transmission lines in various parts of the country and enhance efficiency of the distribution system in the northern part of the Kathmandu Valley.

An agreement to this extent was signed between Finance Secretary Shanta Raj Subedi and Sharad Bhandari, officer-in-charge of the ADB’s Nepal Resident Mission. 

Also, a separate project agreement was signed between Kulman Ghishing, managing director of the state-owned Nepal Electricity Authority, and Bhandari. 

Of the total amount provided by the Manila-based multilateral lender, $150 million is in concessional loan and another $2 million is in the form of grant from the Japan Fund for Poverty Reduction, says a statement issued by the Ministry of Finance on Sunday.

The fund will be used to implement the Power Transmission and Distribution Efficiency Enhancement Project. The project aims to build electricity transmission lines and upgrade power sub-stations at Barhabise, Laphsiphedi, Khimti and Chapagaun areas, and rehabilitate and enhance capacity of distribution system in the Valley. 

The project has been given a completion deadline of four-and-a-half years.

The ADB has also agreed to provide a loan of $21 million (approximately Rs2.13 billion) to the government to implement South Asian Subregional Economic Cooperation (Sasec) Customs Reforms and Modernisation for Trade Facilitation Programme. 

An agreement to this extent was signed between Baikuntha Aryal, head of the International Economic Cooperation Coordination Division at the Ministry of Finance, and ADB’s officer-in-charge Bhandari.

The fund will be used to introduce national policy and legal framework to facilitate trade, improve customs procedures, and strengthen the organisational structure and other capacity of the Department of Customs. These efforts are expected to simplify, harmonise and modernise trade processes. 

The loan amount should be utilised within August 2021, says the statement issued by the Finance Ministry.

The performance of projects funded by the ADB in Nepal had “improved notably” in 2016, with the government setting new records in fund disbursement and contract awards. 

The ADB had set a target of disbursing $247 million in Nepal in 2016. 

Of this, $221 was disbursed, achieving 89.5 percent of the target. The ADB had also set a target of awarding contracts worth $414 million in 2016. 

By the end of the year, contracts worth $369 million were awarded, which was 89 percent of the target. 

The contract award and fund disbursement were highest in ADB’s operational history in Nepal.