Project Data Sheet

Project Data Sheets (PDS) contain summary information on the project or program: Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

PDS Creation Date
PDS Updated as of 19 Oct 2014

Project Name South Asia Subregional Economic Cooperation Power System Expansion Project
Country Nepal
Project/Program Number 44219-014
Status Approved
Geographical Location
In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
Sector Energy
Subsector Electricity transmission and distribution
Renewable energy generation - small hydro
Renewable energy generation - solar
Renewable energy generation - wind
Strategic Agendas Environmentally sustainable growth (ESG)
Inclusive economic growth (IEG)
Regional integration (RCI)
Drivers of Change Gender equity and mainstreaming (GEM)
Governance and capacity development (GCD)
Partnerships (PAR)
Gender Equity and Mainstreaming Categories Category 2: Effective gender mainstreaming (EGM)

Financing

Type/Modality of Assistance Approval Number Source of Funding Approved Amount (thousand)
Technical Assistance8678Technical Assistance Special Fund500
Loan3139Asian Development Fund180,000
Grant0397Norwegian Grant (w/ LoA)60,000
Grant0398Strategic Climate Fund11,200
Counterpart 68,800
TOTAL US$ 320,500

Safeguard Categories

For more information about the safeguard categories, please see http://www.adb.org/site/safeguards/safeguard-categories

Environment B
Involuntary Resettlement A
Indigenous Peoples B

Summary of Environmental and Social Issues

Environmental Aspects
Initial environmental examinations and an environmental assessment and review framework for future unidentified off-grid subprojects have been prepared for both on- and off-grid components following ADB's Safeguard Policy Statement (2009) and the government's environmental regulatory framework. Potential impacts are mostly temporary and reversible, but some irreversible impacts on the natural habitat will occur because of the clearance of about 150 hectares of forested land. Available information on the habitat ranges and elevations of sensitive species indicates that critical habitat will not be directly impacted; potential impacts on natural habitat and potentially sensitive ecosystems have been identified and can be readily mitigated. Due diligence has determined that associated hydropower facilities comply with Nepal s regulatory requirements. Cumulative and induced impacts will have net positive benefits from easier access to energy and productive end uses of energy. Climate change risk screening was conducted and resulted to a medium climate change classification. Risks identified will be addressed through best practice engineering design. The initial environmental examinations and environmental management plans (EMPs) for all components include mitigation measures, monitoring, and budgetary provisions that are adequate to address the environmental impacts of the project. The EMPs requirements will be incorporated into bidding documents. The NEA and AEPC have sufficient capacity to supervise construction contracts and EMP implementation, including preparation of semiannual monitoring reports. The EMPs will be updated as necessary during implementation. Public consultation and information disclosure requirements have been met, including requirements for consultation with the management teams for protected areas. The environmental assessment for the project was disclosed on ADB s website on 28 February 2014.
Involuntary Resettlement
The project will require land acquisition and involuntary resettlement, which will primarily be economic displacements with limited impact from physical displacement. The transmission and distribution components will have permanent and temporary impacts. Permanent impacts are anticipated from land acquisition for the construction of new transmission substations, distribution substations, transmission towers, and distribution poles. The temporary impacts will be from the loss of trees and crops along the right-of-way. About 715 households will be affected by land acquisition and loss of crops and trees. An initial assessment shows that the project areas do not have any endangered indigenous peoples groups. The magnitude of the impacts on indigenous peoples is not significant. Impacts are limited to loss of portions of land which will be compensated at replacement cost. Where these groups are considered vulnerable, additional resettlement assistance will be provided, in addition to the compensation, and consultations will be carried out to make them aware of the project and to obtain their endorsement for land acquisition. The off-grid component will not have any resettlement impacts for sample subprojects and no adverse impacts on indigenous peoples. The minimum private land requirements for the sample subprojects will be met through voluntary land donation. A due diligence report has been prepared for the sample subprojects. The off-grid component allows for future subprojects, which have not been identified and are subject to due diligence. Therefore, a resettlement framework and an indigenous peoples planning framework have been prepared as required by the Safeguard Policy Statement and related national policies and legislation. AEPC will monitor the implementation of the resettlement and indigenous people plan, and will submit semiannual reports to ADB. Social safeguards measures will be achieved in line with the provisions stated in the PAM. A summary of the initial social safeguards assessment is presented in the summary poverty reduction and social strategy.
Indigenous Peoples
Based on surveys, two draft combined resettlement and indigenous peoples plans have been prepared for the on-grid components, in line with ADB?s Safeguard Policy Statement and the government?s legal framework. These plans will be publicly disclosed to interested stakeholders on the ADB and NEA websites.

Stakeholder Communication, Participation and Consultation

During Project Design
Stakeholder participation and consultations were conducted during project design. The same will be conducted during project implementation.
During Project Implementation
Stakeholder participation and consultations were conducted during project design. The same will be conducted during project implementation.

Description

Project Rationale and Linkage to Country/Regional Strategy

Nepal is facing chronic power shortages. Only 65% of the country s households have access to electricity 56% through the national grid and 9% through off-grid solutions. Per capita electricity consumption is 102 kilowatt-hours per year, one of the lowest in the world. The installed capacity is 762 megawatts (MW), well below the peak demand of 1,095 MW. As a result, consumers connected to the national grid experience scheduled power cuts of 12 hours per day or more during the dry season. With the expected commissioning of six hydropower projects with a combined capacity of 732 MW in the next 3 to 6 years and more than 1,500 MW of additional capacity being developed, a wet season supply surplus is anticipated by 2018. However, the limited power transmission and distribution network is becoming a bottleneck for meeting domestic power demand, as well as power trade with neighboring countries. To achieve the 25% electrification target through off-grid solutions, the government has enacted policies and plans such as the Rural Energy Policy 2006, Subsidy Policy for Renewable (Rural) Energy 2009 2013, Renewable (Rural) Energy Subsidy Delivery Mechanism 2013, and Delivery Mechanism of Additional Financial Support to Micro/Mini Hydro Project 2011. Enabling measures such as targeted grants (subsidies) and exemption of renewable energy projects from certain licensing requirements have been set up. These activities are being coordinated and implemented under the National Rural and Renewable Energy Program, a government-led single window program for off-grid renewable energy supported by development partners.

Development Impact

Increased electricity access in Nepal and improved power exchange across the border

Project Outcome

Description of Outcome
Increased capacity of national grid and enhanced renewable energy development
Progress Towards Outcome
Loan agreement signed on 11 July 2014. Loan effectiveness expected in November 2014.

Outputs and Implementation Progress

Description of Project Outputs
1. Power transmission capacity increased 2. Power distribution network improved 3. Mini-grid-based renewable energy systems in off-grid areas increased 4. Capacity development support to NEA and AEPC provided.
Status of Implementation Progress (Outputs, Activities, and Issues)
NEA approved the establishment of Project Management Directorate (PMD) and appointed a Chief of PMD.
Status of Development Objectives
Material Changes

Business Opportunities

Date of First Listing 2013 Jul 31
Consulting Services
The project will be executed over a period of six years from the date of loan effectiveness. Consultants (individuals and firm) to be financed by ADB funds and ADB administered funds will be recruited in accordance with ADB s Guidelines on the Use of Consultants (2013, as amended from time to time). All procurement to be financed by ADB fund and ADB administered funds will be carried out in accordance with ADB s Procurement Guidelines (2013, as amended from time to time). For the procurement to be financed by ADF loan, or jointly by ADF and Norwegian grant, a blanket waiver of member country procurement eligibility restrictions will be applied. The government has requested ADB to approve advance contracting and retroactive financing for procurement of goods and turnkey works. If approved, retroactive financing may be allowed for up to 20% of the loan amount for expenditures incurred 12 months prior to loan signing. The government has been advised that ADB s approval of advance contracting and retroactive financing in principle does not commit ADB to finance the project.
Procurement
The project will be executed over a period of six years from the date of loan effectiveness. Consultants (individuals and firm) to be financed by ADB funds and ADB administered funds will be recruited in accordance with ADB s Guidelines on the Use of Consultants (2013, as amended from time to time). All procurement to be financed by ADB fund and ADB administered funds will be carried out in accordance with ADB s Procurement Guidelines (2013, as amended from time to time). For the procurement to be financed by ADF loan, or jointly by ADF and Norwegian grant, a blanket waiver of member country procurement eligibility restrictions will be applied. The government has requested ADB to approve advance contracting and retroactive financing for procurement of goods and turnkey works. If approved, retroactive financing may be allowed for up to 20% of the loan amount for expenditures incurred 12 months prior to loan signing. The government has been advised that ADB s approval of advance contracting and retroactive financing in principle does not commit ADB to finance the project.
Procurement and Consulting Notices
http://www.adb.org/projects/44219-014/business-opportunities

Timetable

Concept Clearance 31 Jul 2013
Fact-finding 16 Mar 2014 to 21 Mar 2014
Management Review Meeting 22 Apr 2014
Approval 04 Jul 2014
Last Review Mission

Milestones

Approval No. Approval Signing Effectivity Closing
Original Revised Actual
Loan 3139 04 Jul 2014 30 Jun 2022

Utilization

Date Approval Number ADB (US$ thousand) Others (US$ thousand) Net Percentage
Cumulative Contract Awards
21 Oct 2014 Loan 3139 0 0 0.00%
Cumulative Disbursements
21 Oct 2014 Loan 3139 0 0 0.00%

TA Amount (US$ thousand)

Approval Number Approved Amount Revised Amount Total Commitment Uncommitted Balance Total Disbursement Undisbursed Balance

Status of Covenants

Covenants are categorized under the following categories—audited accounts, safeguards, social, sector, financial, economic, and others. Covenant compliance is rated by category by applying the following criteria: (i) Satisfactory—all covenants in the category are being complied with, with a maximum of one exception allowed, (ii) Partly Satisfactory—a maximum of two covenants in the category are not being complied with, (iii) Unsatisfactory—three or more covenants in the category are not being complied with. As per the 2011 Public Communications Policy, covenant compliance ratings for Project Financial Statements apply only to projects whose invitation for negotiation falls after 2 April 2012.

Approval No. Category
Sector Social Financial Economic Others Safeguards Project Financial Statements
Loan 3139
Grant 0397
Grant 0398

Contacts and Update Details

Responsible ADB Officer Zhang Lei (zlei@adb.org)
Responsible ADB Department South Asia Department
Responsible ADB Divisions Energy Division, SARD
Executing Agencies

Links

Project Website http://www.adb.org/projects/44219-014/main
List of Project Documents http://www.adb.org/projects/44219-014/documents