Project Name Electricity Grid Modernization Project
Project Number 54107-001
Country / Economy Nepal
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 4014-NEP: Electricity Grid Modernization Project
Concessional ordinary capital resources lending US$ 156.00 million
Loan 4109-NEP: Electricity Grid Modernization Project " Additional Financing
Concessional ordinary capital resources lending US$ 60.00 million
Operational Priorities OP1: Addressing remaining poverty and reducing inequalities
OP2: Accelerating progress in gender equality
OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
OP4: Making cities more livable
OP6: Strengthening governance and institutional capacity
OP7: Fostering regional cooperation and integration
Sector / Subsector

Energy / Electricity transmission and distribution

Gender Effective gender mainstreaming
Description

The project will finance high-priority electricity grid modernization investments both in transmission and distribution system in Nepal under the following outputs:

Output 1: Electricity transmission capacity in project areas strengthened and modernized. The project will finance (i) automation of 40 grid substations throughout the country; (ii) construction of 3 units of modern 132/11 kV grid substations with automation (each with 2x45 megavolt ampleres [MVA] capacity) together with 16 km of 132 kV double circuit underground line along Chobhar-Lagankhel-Sinamangal, and 5 km of 66 kV double circuit underground transmission line along Sinamangal-Chabahil in Kathmandu Valley; (iii) upgrading of 237 km of 132 kV transmission lines with more efficient high-temperature-low-sag conductors; and (iv) commissioning of transmission system consisting of 4 automated grid substations with capacity of 290 MVA and 48 km transmission lines in Myagdi and Dhading districts.

Output 2: Electricity distribution system in project areas modernized. This will include (i) construction of distribution control center in Kathmandu; (ii) installation of additional 350,000 smart meters in Kathmandu Valley; (iii) construction of 8 substations with automation along with distribution system reinforced and extended in Dhading, Dharan, Morang, Nepalgunj, Parasi, Sindhupalchowk and Surkhet; and (iv) 150,000 new households (including xx women-headed households) connected to the national grid.

Output 3: Capacity of NEA and electricity users in project areas strengthened. Considering the importance of continued support to NEA and users, the project will support increasing knowledge of (i) at least 40 eligible NEA staff (including 30% eligible women) on automation of grid substations; (ii) at least 30 eligible NEA staff (including 30% women) on NEA's organizational development; (iii) at least 20 eligible NEA staff (including 30% women) on putting in place improved billing and collection measures; and (iv) at least 2,000 electricity consumers in project areas (40% women and disadvantaged group on safe and efficient use at distribution centers. The project will also support implementation of key actions from NEA's gender equality and social inclusion (GESI) strategy and operational guidelines in its regional offices, to complement corporate level activities covered under a forthcoming project.

These outputs will result in the following outcome: access to efficient grid electricity supply in Nepal improved. The project will be aligned with the following impact: investments in industrial and commercial hubs promoted.

Project Rationale and Linkage to Country/Regional Strategy Nepal is a landlocked, mountainous country located between the large and fast-growing economies of the People's Republic of China to the north and India to the east, west, and south. Nepal's gross domestic product (GDP) growth averaged 7.3% during FY2017FY2019. With deepening economic uncertainties because of the coronavirus disease (COVID-19) pandemic, compounded by social and health emergencies, the preliminary estimates from the Central Bureau of Statistics in Nepal show that GDP growth will significantly decline to 2.3% in FY2020. The need to stimulate post-COVID-19 economic recovery by developing Nepal's infrastructure has become more relevant.
Impact

Reliable and efficient electricity for all achieved

NEA developed as modern and sustainable corporate entity that provides reliable services to its customers

Project Outcome
Description of Outcome

Reliability, efficiency, and financial sustainability of electricity supply in Nepal improved

Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Electricity transmission capacity in project areas strengthened and modernized

Electricity distribution system in project areas strengthened and modernized

Capacity of NEA to implement its corporate development plan strengthened

Status of Implementation Progress (Outputs, Activities, and Issues) Implementation is ongoing
Geographical Location Nation-wide
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services The project will be implemented and supervised by the project management unit under the Project Management Directorate (PMD) of NEA. NEA will assign a dedicated team headed by a project director. Environmental and Social Management Plans and Occupational Health and Safety Plan implementation and monitoring support will be provided to the safeguard unit at PMD. A project supervision consultant will be hired to support NEA in implementing the project. Most of the contracts are expected to be tendered as turnkey for project implementation. Procurement (including consulting services) will follow ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time). The government will ensure proper coordination during implementation of this project.
Procurement Nepal Electricity Authority (NEA) is the proposed executing and implementing agency which has significant experience in implementing ADB projects and established processes and capacity to handle ADB procurement. While most of the contracts are limited to specific geographical area, the substation automation package involves 40 substations throughout the country but would be easy to implement.
Responsible ADB Officer Shah, Grishma
Responsible ADB Department Sectors Group
Responsible ADB Division Energy Sector Office (SG-ENE)
Executing Agencies
Nepal Electricity Authority (NEA)
Timetable
Concept Clearance 03 Jun 2020
Fact Finding 22 Jun 2020 to 26 Jun 2020
MRM 20 Aug 2020
Approval 26 Nov 2020
Last Review Mission -
Last PDS Update 16 Sep 2022

Loan 4014-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Nov 2020 30 Dec 2020 04 Feb 2021 30 Sep 2026 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 195.00 Cumulative Contract Awards
ADB 156.00 25 Apr 2024 132.99 0.00 85%
Counterpart 39.00 Cumulative Disbursements
Cofinancing 0.00 25 Apr 2024 39.51 0.00 25%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory

Loan 4109-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
17 Sep 2021 26 Nov 2021 08 Feb 2022 30 Sep 2026 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 75.00 Cumulative Contract Awards
ADB 60.00 25 Apr 2024 58.20 0.00 97%
Counterpart 15.00 Cumulative Disbursements
Cofinancing 0.00 25 Apr 2024 5.84 0.00 10%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory
 
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Source URL: https://www.adb.org/projects/54107-001/main