Nepal : Tanahu Hydropower Project

Project Name

Tanahu Hydropower Project

Project Number

43281-013

Country / Economy

• Nepal

Project Status

Active

Project Type / Modality of Assistance

• Grant
• Loan
• Technical Assistance

Source of Funding / Amount

Loan 2990-NEP: Tanahu Hydropower Project

Source	Amount
Asian Development Fund	US$ 120.00 million

Loan 2991-NEP: Tanahu Hydropower Project (ADF Hard-term)

Source	Amount
Asian Development Fund	US$ 30.00 million

Loan: Tanahu Hydropower Project (ADF Hard Term)

Source	Amount
European Investment Bank	US$ 70.00 million

Loan: Tanahu Hydropower Project (ADF Hard-term)

Source	Amount
Japan International Cooperation Agency	US$ 184.00 million
Abu Dhabi Fund	US$ 30.00 million

TA 8329-NEP: Support for Sustainable Energy Management and Reforms

Source	Amount
Japan Fund for Prosperous and Resilient Asia and the Pacific	US$ 1.50 million

Loan: Tanahu Hydropower Project

Source	Amount
European Investment Bank	US$ 15.00 million

Grant: Tanahu Hydropower Project

Source	Amount
KfW	US$ 33.55 million

Strategic Agendas

• Environmentally sustainable growth
• Inclusive economic growth

Drivers of Change

• Gender Equity and Mainstreaming
• Governance and capacity development
• Partnerships
• Private sector development

Sector / Subsector

• Energy / Electricity transmission and distribution - Large hydropower generation

Gender

Effective gender mainstreaming

Description

The project has three main components: (i) a medium-sized hydropower plant of 140 megawatts (MW) with significant water storage facilities and associated transmission lines to evacuate the generated power; (ii) rural electrification and community development in the project area, and (iii) a reform and restructuring plan for the national utility, the Nepal Electricity Authority (NEA). The project site is in the Seti River in the Tanahu district, about 150 kilometers (km) west of Kathmandu.

Project Rationale and Linkage to Country/Regional Strategy

Nepal faces a mounting energy crisis. Supplies fall well short of demand, the main utility operating the system is highly inefficient, the policy environment is weak, and the role of the private sector is far too small. The supply gap is growing, especially during the dry season in winter (NovemberApril). Kathmandu, the main consumption center, has blackouts of 1418 hours a day during this season and load shedding almost every day year-round. Supplies in the rest of the country fare even worse, although an additional problem here is a very low electrification rate. In the meantime, demand for electricity has been growing at 10% annually. This supply gap forces consumers to use diesel generators. These are expensive and very polluting. Rising diesel imports affect the balance of payments, and the doubling of diesel prices over the past 3 years also hurts the income base of people and businesses. The supply problem is becoming one of the biggest obstacles to economic growth. It curtails investment and trade, productivity, job creation, and the quality of life of most citizens. The proposed project is one of a series of similar investments to help overcome this supply problem.

Impact

Expanded access to clean and sustainable energy in Nepal

Project Outcome

Description of Outcome

Increased efficiency and supply of reliable hydropower energy

Progress Toward Outcome

Contract for headworks package signed in March 2021. Site mobilization has taken place.

Implementation Progress

Description of Project Outputs

1. Hydropower plant and transmission system made operational

2. Rural electrification increased

3. Community development program in the project area implemented

4. NEA restructured

5. Other sector reforms undertaken

6. Equity sales scheme for hydropower development initiated

Status of Implementation Progress (Outputs, Activities, and Issues)

1. On track to meet target

2. On track to meet target

3. On track to meet target

4. On track to meet target

5. On track to meet target

6. On track to meet target

Geographical Location

Nation-wide, Bharatpur, Central Region, Damauli, Dharampani, Lumbini Zone, Majhkot, Mid Western, Narayani Zone, Rapti Zone, Tanahun, Western Region

Safeguard Categories

Environment

A

Involuntary Resettlement

A

Indigenous Peoples

A

Summary of Environmental and Social Aspects

Environmental Aspects

Please see:http://www.adb.org/Documents/RRPs/?id=43281-013-3

Involuntary Resettlement

Please see:http://www.adb.org/Documents/RRPs/?id=43281-013-3

Indigenous Peoples

Please see:http://www.adb.org/Documents/RRPs/?id=43281-013-3

Stakeholder Communication, Participation, and Consultation

During Project Design

Please see:http://www.adb.org/Documents/RRPs/?id=43281-013-3

During Project Implementation

Business Opportunities

Consulting Services

At the request of the government and THL, consultants under Part D will be recruited directly by ADB under the Guidelines on the Use of Consultants (2010, as amended from time to time). The project's construction period is projected at 7 years, which includes about 1.5 years for project site development (building access roads and a bridge to reach the main construction site) and the execution of safeguard plans.

Procurement

Procurement packages will be split into four parts: part A will cover main headworks; part B will procure equipment and other powerhouse facilities; part C will secure transmission and rural electrification lines; and part D will include project supervision and other technical expertise. Part B components will be procured by JICA. Parts A and C will follow international competitive bidding in line with ADB Procurement Guidelines (2010, as amended from time to time). Because of joint cofinancing, procurement under Part A will require a waiver. This is because it involves funding from ADFD and EIB and thus potentially procurement from non-ADB member countries.

Contact

Responsible ADB Officer

Acharya, Jiwan S.

Responsible ADB Department

Sectors Group

Responsible ADB Division

Energy Sector Office (SG-ENE)

Executing Agencies

Ministry of Energy

Nepal Electricity Authority (NEA)

Tanahu Hydropower Limited

Timetable

Concept Clearance

25 Sep 2012

Fact Finding

13 Aug 2012 to 27 Aug 2012

MRM

23 Oct 2012

Approval

21 Feb 2013

Last Review Mission

-

Last PDS Update

16 Sep 2022

Funding

Loan 2990-NEP

Loan 2991-NEP

TA 8329-NEP