ADB okays $150m loan to upgrade power supply

The Asian Development Bank (ADB) has approved a $150 million loan to help improve the reliability and efficiency of Nepal’s electricity supply and distribution through the Nepal Electricity Authority (NEA). 

The ADB will also administer a $2 million technical assistance grant from the Japan Fund for Poverty Reduction (JFPR) financed by the government of Japan to strengthen the capacity of Nepal’s energy sector to deliver Gender Equality and Social Inclusion (GESI) results. “ Reliable and sustainable electricity distribution and service is an important aspect to Nepal’s growth and development, as well as in the improvement of the quality of life of all its people,” said Jiwan Acharya, an ADB senior energy specialist. 

“We are confident that the project will help improve electricity distribution and efficiency in the country, and significantly support the government’s goal of ending the country’s energy crisis within the next two years and achieving Sustainable Development Goal 7 (Sustainable Energy for All).”  Electricity supply is expected to increase rapidly during the next several years with various hydropower projects nearing completion and imports from India over cross-border lines. 

Therefore, existing transmission and distribution systems need to be immediately rehabilitated and upgraded for the network to be able to deliver additional power supply to consumers.  The project will enhance the distribution capacity and improve the reliability and quality of the Kathmandu Valley’s electricity supply by reducing distribution system overloads and technical and commercial losses.  This will be done by strengthening the transmission grid capacity, increasing the capacity and rehabilitating the distribution network in the project area, besides enhancing operational and financial performance of NEA distribution centres.  The project will also develop the NEA’s capacity to operate and manage an advanced distribution system and intelligent network (smart grid) technology with GESI aspects in electricity access and end-user awareness programmes.  The NEA is the main government agency responsible for electricity generation, transmission and distribution in Nepal. 

The Kathmandu Valley, the main project area, accounts for about 400,000 electricity end-users or about 16 percent of the NEA’s total consumers in Nepal.  The ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration.  Established in 1966, the ADB is celebrating 50 years of development partnership in the region.  It is owned by 67 members, 48 from the region.  In 2016, ADB assistance totaled $31.7 billion, including $14 billion in co-financing.