Nepal: Kali Gandaki “A” Hydroelectric Project

Date: December 2012
Type: Evaluation Reports
Country:
Subject:
ADB administration and governance; Evaluation; Energy
Series: Project Performance Evaluation Reports
Project Number: LN1452

Description

Hydropower accounts for 86% of Nepal’s electricity generation capacity. The main thrust of the government’s energy policy has therefore been to develop the country’s hydropower potential to provide a renewable source of energy for domestic use and for export.

The Kali Gandaki “A” Hydroelectric Project on the Kali Gandaki River—begun in 1996 and completed in 2002—was an integral part of the Nepal Electricity Authority’s least-cost generation expansion plan to meet rising electricity demand. Although the project, supported by the Asian Development Bank (ADB), has long been completed, it was considered worthwhile to conduct a performance evaluation on its effectiveness, efficiency, relevance and sustainability, as well as to draw lessons for other sustainable energy projects. In addition, many environmental and social impacts were not clear immediately after project completion.

ADB assisted with the project design and a $160 million loan. Overall, the project was rated successful. It effectively contributed to economic growth by producing on average close to 592 gigawatt-hours per year since commissioning, thus benefiting consumers nationwide. And some 4,142 households were connected to the grid under the project.

The evaluation report makes three key recommendations: (i) Nepal Electricity Authority should invest $20 million in the plant to rectify problems, which include vibrations in the powerhouse; and ADB should consider making funds available to carry this out; (ii) the government should revise electricity tariffs to encourage cost recovery and foreign investment in the energy sector; and (iii) environmental and social mitigation measures should be formulated comprehensively in an area development approach to ensure the “do good” in addition to “do no harm” principle is applied—and particularly because many future hydro projects will likely be undertaken by the private sector or as public–private partnerships, which will require far more streamlined approaches to addressing environmental and social impacts.

Contents

  • Basic Data
  • Executive Summary
  • Chapter 1: Introduction
  • Chapter 2: Design and Implementation
  • Chapter 3: Performance Assessment
  • Chapter 4: Other Assessments
  • Chapter 5: Issues, Lessons, and Follow-up Actions
  • Appendixes

Nepal: Kali Gandaki “A” Hydroelectric Project by Independent Evaluation at Asian Development Bank