Nepal to modernise power grid using $200 million ADB loan


The government of Nepal has secured a $200 million loan from the Asian Development Bank to modernize and reinforce the country’s energy grid network.

The loan will cover the strengthening of power transmission and distribution systems to increase network capacity, improve quality and reliability, and remove delays between generation hubs and load centers.

A number of projects will be implemented in Kathmandu Valley, Bharatpur metropolitan area of Chitwan district in Bagmati Province and Pokhara of Kaski district in Gandaki province where supply interruptions are frequent and prolonged.

In Gandaki, the aim will be to improve the quality of electricity supply where it is poor and about 20% of households are still without access to the national grid.

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Nepal will also benefit from a $35 million grant issued by the government of Norway to install new and upgrade existing substations.

Upgrading of substations in Khimti, Barhabise, and Lapsiphedi to 400 kilovolts will facilitate cross-border power exchange with India.

The project is aligned with the South Asia Subregional Economic Cooperation program on intraregional power trade through cross-border power exchange.

Norway has also promised a $5 million technical assistance grant to the Nepal Electricity Authority to ensure gender equality and social inclusion as well as to integrate new technologies within the grid.

Jiwan Acharya, principal energy specialist at ADB, 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.

“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 socio-economic impact of the coronavirus disease (COVID-19) pandemic.”