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ADB to provide $200m loan to modernise power distribution in Nepal

The Asian Development Bank (ADB) has agreed to provide a $200m loan to Nepal for improving the power supply and distribution networks in the country.

The project will finance the reinforcement and modernisation of the power supply system plagued by frequent and prolonged supply interruptions in Kathmandu Valley, Bharatpur metropolitan area of Chitwan district in Bagmati Province and Pokhara of Kaski district in Gandaki Province.

It will also support Province 2, where the quality of electricity is poor and about 20% of households still do not have access to the national grid.

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

By upgrading substations in Khimti, Barhabise and Lapsiphedi to 400kV cross-border power exchange with India could be facilitated.

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 labour during the construction phase as the country adopts measures to mitigate the socio-economic impact of the coronavirus disease (COVID-19) pandemic.”

The loan from ADB is being complemented by the Government of Norway with $35m in co-financing grant to install and upgrade the power distribution networks in Province 2 and various substations to evacuate hydropower in the country.

Furthermore, it is providing $5m in technical assistance grant for capacity development of the Nepal Electricity Authority to add new technologies to make electricity infrastructure resilient.


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