Nepal granted $200m loan to modernise power supply systems

While Nepal has made significant progress in power supply after years of chronic electricity shortages, its transmission and distribution systems need to be further strengthened

The Big Zero report

Nepal has been granted a loan worth $200 million (£159m) to improve the power supply and distribution systems across the country.

The Asian Development Bank (ADB) has approved the concessional loan that will support projects including the reinforcement and modernisation of the electricity supply system in certain areas of the Kathmandu Valley, Chitwan and Pokhara, where supply interruptions are frequent and prolonged.

The project also aims to support Province 2, where the quality of electricity supply is poor and around 20% of households still don’t have access to the national grid.

The ABD says while Nepal has made significant progress in power supply after years of chronic electricity shortages, its transmission and distribution systems need to be further strengthened to boost network capacity, improve quality and reliability and remove delays between generation hubs and load centres.

The Government of Norway is also providing a $35 million (£28m) co-financing grant for the installation and upgrading of power distribution networks in Province 2 and various substations across the country.

In addition, the Nepal Electricity Authority has been granted $5 million (£4m) to ensure gender equality and social inclusion are strengthened and new technologies are used to make electricity infrastructure resilient.

ADB Principal Energy Specialist Jiwan Acharya said: “The project will help sustain Nepal’s improved electricity supply momentum over the past two years. This will facilitate meeting future demand from commercial and industrial activities as well as from communities, particularly women, who can now benefit from electricity-based enterprises and focus on productive economic and social activities.

“It is also very timely because the project will create employment opportunities for skilled and unskilled labor during the construction phase as the country adopts measures to mitigate the socioeconomic impact of the coronavirus disease (COVID-19) pandemic.”

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