A loan worth $180 million (£105m) has been granted to Nepal to help the nation tackle its crippling power shortages.

The cash will be used by the Nepal Electricity Authority (NEA) to upgrade and expand transmission and distribution lines and substations, allowing the transfer of up to 2,000MW of power to main load centres in the capital Kathmandu.

It is also expected to allow Nepal to export at least 1,200MW of electricity to India when a second transmission line is complete, the Asian Development Bank (ADB) said, which is providing the loan.

Lei Zhang, Energy Specialist with ADB’s South Asia Department said: “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 are suffer power cuts for up to 12 hours a day during the dry season.”

The project will also help the Alternative Energy Promotion Centre (AEPC) provide electricity to hard-to-reach rural communities through renewable energy systems, including hydro, solar and wind generation.