ADB okays $180m loan to ease power shortages

- POST REPORT, Kathmandu
ADB okays $180m loan to ease power shortages

Jul 7, 2014-

The Asian Development Bank (ADB) has approved a $ 180 million loan to help Nepal overcome crippling power shortages and export surplus power to neighbouring India. The loan, from the ADB’s concessional resources, will be complemented by a co-financing loan of $ 120 million from the European Investment Bank, a $ 60 million grant from the government of Norway, and a $ 11.2 million grant from the ADB-administered Strategic Climate Fund.

The loan will help the Nepal Electricity Authority (NEA) finance a substantial upgrade and expansion of transmission and distribution lines and substations, allowing the transfer of up to 2,000 MW of power to main load centres in the Kathmandu valley.

This network expansion will also give Nepal the ability to export at least 1,200 MW of electricity to India, once a second 400 KV cross-border transmission line from Bardaghat to Gorakhpur in India is complete.

With six new hydropower plants due to come on stream over the next three to six years, the country expects to have a substantial wet season supply surplus for export by 2018.

“Right now, limited generating capacity and weak power transmission and distribution networks mean two-thirds of households in Nepal have no electricity and many of those who have power suffer power cuts for up to 12 hours a day during the dry season,” said Lei Zhang, Energy Specialist with the ADB’s South Asia Department, in a press statement. “There’s a pressing need to provide more energy to domestic customers and harness more clean energy for sale overseas when the country has surpluses.”

The project will also help the Alternative Energy Promotion Centre (AEPC) provide electricity to hard-to-reach rural communities with mini-grid renewable energy systems, including mini hydroelectric, solar and wind generation, through provision of an ADB credit line and the ADB-administered Strategic Climate Fund.

Through an associated capacity development technical assistance, the project will support the AEPC to develop a feasibility study for a large-scale wind farm.

Since 2009, the ADB has helped Nepal reform and overhaul its power sector, and the new assistance will aid the government’s target of providing grid power to 75 percent of the population with off-grid energy for the remaining 25 percent by 2027.

The project is also a priority initiative of the broader South Asia Subregional Economic Cooperation Programme, which aims to expand power and other cross-border exchanges and connections around the region.

The projects are expected to be completed by the end of 2021.

Published: 08-07-2014 09:33

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