Nepal: Project Preparatory Facility for Energy

Sovereign Project | 47036-001

ADB is helping Nepal lay the groundwork for projects needed to reduce local power shortages and to provide surplus electricity for export to India. The project will support feasibility studies and other preparatory work for selected hydropower projects, including an export-oriented hydropower project under a public-private partnership, and a second Nepal-India 400-kilovolt transmission line.

Project Details

  • Project Officer
    Acharya, Jiwan S.
    South Asia Department
    Request for information
  • Country/Economy
    Nepal
  • Modality
    • Grant
  • Sector
    • Energy
Project Name Project Preparatory Facility for Energy
Project Number 47036-001
Country / Economy Nepal
Project Status Active
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 0361-NEP: Project Preparatory Facility for Energy
Asian Development Fund US$ 21.00 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Private sector development
Sector / Subsector

Energy / Electricity transmission and distribution - Large hydropower generation

Gender Equity and Mainstreaming No gender elements
Description The Project Preparatory Facility for Energy (the Facility) is intended to prepare a series of hydropower projects and related transmission infrastructure for development in Nepal, emphasizing private sector participation and regional integration. The Facility will support for project preparatory activities of selected candidate hydropower projects and Kohalpur- Surkhet-Upper Karnali 400kV Transmission Line, Kohalpur-New Butwal 400kV Transmission Line, and produce a set of bankable documents. The study includes feasibility study and environmental / social impact assessments (EIA/SIA) etc. The hydropower projects for such study will be selected from various candidate projects being considered for development through private or public / public-private sectors.
Project Rationale and Linkage to Country/Regional Strategy

The current inadequacy and unreliability of the power supply result from a low level of investments in the past. Ongoing weakness in strategic, operational, managerial, and financial policies aggravated the problem. An uneconomic tariff regime dents the financial standing of the Nepal Electricity Authority (NEA), the power sector's only utility, leaving it unable to cover its new capital investments as well as the current operation and maintenance costs. The government lacks the financial means and institutional capacity to resolve the energy crisis alone, and if the private sector is to play a bigger role, it needs more and better entry points for investment. In addition to building greater generation capacity, Nepal must also upgrade and expand its limited transmission and distribution networks. A major obstacle to exploiting Nepal's hydropower export potential is the shortage of adequate infrastructure to transmit electricity to neighboring India. Instead of exporting power, in fact, Nepal imports it from India. Developing Nepal''s hydropower generation, transmission, and export infrastructure would benefit both countries. ADB country partnership strategy emphasizes the development of hydropower generation, power transmission and distribution infrastructure._

Impact

Infrastructure for hydropower developed

Project Outcome
Description of Outcome

High-quality due diligence provided to support investments to transform the power sector

Progress Toward Outcome Ongoing.
Implementation Progress
Description of Project Outputs

Feasibility and detailed engineering studies carried out.

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

An extension in Grant closing date until 30 June 2023 has been approved on 4 May 2022.

Status as of 30 June 2022

(i)Dudh Koshi Storage Hydropower Project._The feasibility study has been updated and draft detailed design report has been submitted. NEA and the consultant are working to complete additional investigations as recommended by the panel of experts (POE) and Asian Development Bank (ADB) review mission in February 2020. With the onset of coronavirus disease (COVID-19) pandemic, the investigations were delayed along with all the other project activities._Light detection and ranging survey, physical modelling test, audio magneto telluric survey, and hydro fracturing test, etc. are expected to be completed by June 2022. NEA has submitted an EIA for hydropower component is being reviewed by Ministry of Energy, Water Resources and Irrigation. NEA is also preparing an IEE for the transmission line component and terms of reference have been submitted for government approval in mid-February 2022. Draft resettlement plan and indigenous people plans are expected by June 2022, which may need further refinement until December 2022. The core drilling and test adit works have been completed and undertaken under two civil works contracts.

NEA expects all the activities under the consultant's scope to be completed by June 2022; however, additional time might be needed to address the comments from the POE, ADB teams, and other co-financiers on the reports. Additional individual independent experts will be invited to review key sensitive aspects like geology in the final drafts and undertake additional assessments to ensure robustness of the technical design, power dispatch arrangement, and safeguards compliance as part of ADB's due diligence.

The project's board approval has now been pushed to 2023. Completion of all activities being carried out through this grant including technical assessments and design, safeguards, and project viability assessment, especially on the sustainable power purchase agreement, among others are critical.

(ii)_ Lower Seti Hydropower Project. THL has carried out hydrology, sedimentology, hydraulic studies, and project optimization studies through the consulting contract signed on 12 April 2019. Detailed design is being done and bidding documents are being prepared. POEcomprising of a hydropower expert, hydrology/ sedimentology expert, and geotechnical experthas been reviewing them and providing comments. The consultant is also carrying out environmental impact and social safeguard assessments. All the services are expected to be completed by December 2022.

(iii) The government on 7 Nov 2019 has requested to support the study of new transmission lines instead of Tamor hydropower project._Details of status of these transmission lines are given in Output 1-b.

An extension in Grant closing date until 30 June 2023has been approved on 4 May 2022.

(i)New ButwalLamahiNew KohalpurDododharaSurkhetNew Attaria 400 kV transmission line and ChinchuSurkhet 132 kV transmission line. The detailed survey and design for both transmission lines and the associated substations were underway, including the environmental studies; however, these activities were severely impacted by the COVID-19 pandemic. NEA expects completion of the studies from New Butwal to Lamahi by June 2022. With slow progress of services from the consultant's end even after the COVID-19 situation improved, NEA will consider alternative options to the existing contract to ensure completion of the remaining services by December 2022. NEA may consider using its own staff or individual experts to complete the studies. The government has requested ADB for financing a part of the transmission line and substation on 3 March 2020. This project is in the pipeline for 2023 approval

(ii)Feasibility Study and Detailed Design of Transmission Line Project. NEA is conducting feasibility study for five transmission lines through three contracts (CP-1-3). These contracts became effective in February 2020 and the draft inception report has been submitted in June 2020. The field services and consultations have been delayed due to COVID-19. NEA and the consultants agreed to mobilize the national experts to the field at the earliest and complete the feasibility study, detailed design, and environmental and social assessments by 30 June 2022. NEA estimates that the reports can be finalized by December 2022 after incorporating the comments from NEA.

(iii)Transmission System Planning, Feasibility Study, and Project Preparation for Major Cities of Nepal. Contract with Wapcos Limited, India was signed on 2 April 2021 and the consultant commenced services on 6 May 2021. The contract was originally planned for completion in 14 months from contract effectiveness, i.e., June 2022. However, there has been a delay in mobilization of the consultant in Nepal due to COVID-19. The inception report was submitted to NEA only on 18 October 2021. NEA expects the study to be completed by June 2023.

Geographical Location Bardghat, Butwal, Kabhre Palanchok, Khotang, Ramechhap
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects NA
Involuntary Resettlement NA
Indigenous Peoples NA
Stakeholder Communication, Participation, and Consultation
During Project Design

A series of consultations was conducted with relevant officers of the executing agency, persons who may potentially be impacted by projects related to the facility, and the general public who live in and around the proposed project sites. Community members and women's groups were consulted. Information on the preliminary facility and its anticipated benefits was shared in these consultations. Consultations also focused on eliciting the concerns, fears, and expectations of people to be affected by facility-related projects and subprojects, as well as the wider general public. Their suggestions and proposals for effective implementation were also sought. Opportunities for community participation in project planning and implementation were discussed and identified.

During Project Implementation Through email and ADB review mission.
Business Opportunities
Consulting Services

The project requires inputs of three consulting service packages for two candidate hydropower projects and one transmission line project. ADB will assist in the consultant selection process except for negotiation and contract signing. The EA (Nepal Electricity Authority) will be in charge of the recruitment, implementation and reporting process. All procurement activities will be carried out in accordance with ADB Procurement Guidelines (2015, as amended from time to time), and consultants will be recruited using quality and cost-based selection on 90:10 ratio, in line with ADB's Guidelines on the Use of Consultants (2013, as amended from time to time). Consultant recruitment process for component A is ongoing.

The Facility will be used over a seven year period (2013-2020). The Government will ensure adequate budgetary allocation of counterpart funds for timely completion.

Procurement No procurement is envisaged under the project.
Responsible ADB Officer Acharya, Jiwan S.
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Ministry of Energy
Nepal Electricity Authority (NEA)
Timetable
Concept Clearance 12 Jul 2013
Fact Finding 05 Jul 2013 to 21 Jul 2013
MRM 26 Jul 2013
Approval 24 Sep 2013
Last Review Mission -
Last PDS Update 15 Sep 2022

Grant 0361-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
24 Sep 2013 29 Nov 2013 14 Mar 2014 30 Jun 2019 30 Jun 2023 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 26.25 Cumulative Contract Awards
ADB 21.00 26 Oct 2022 19.41 0.00 92%
Counterpart 5.25 Cumulative Disbursements
Cofinancing 0.00 26 Oct 2022 10.13 0.00 48%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - Satisfactory - Unsatisfactory

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.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

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.

Title Document Type Document Date
Project Preparatory Facility for Energy: Audited Project Financial Statements (17 July 2020-15 July 2021) Audited Project Financial Statements May 2022
Project Preparatory Facility for Energy: Procurement Plan Procurement Plans Sep 2021
Project Preparatory Facility for Energy: Audited Project Financial Statements (17 July 2019-15 July 2020) Audited Project Financial Statements Jun 2021
Project Preparatory Facility for Energy: Audited Project Financial Statements (15 July 2018-16 July 2019) Audited Project Financial Statements Jan 2020
Amendment to the Project Agreement for Grant No. 0361-NEP: Project Preparatory Facility for Energy Project/Program Agreements Aug 2019
Project Preparatory Facility for Energy: Audited Project Financial Statements (15 July 2017-15 July 2018) Audited Project Financial Statements Feb 2019
Project Preparatory Facility for Energy: Audited Project Financial Statements (15 July 2016-15 July 2017) Audited Project Financial Statements Feb 2018
Amended and Restated Grant Agreement (Special Operations) for Grant 0361-NEP: Project Preparatory Facility for Energy Grant Agreement Dec 2016
Project Preparatory Facility for Energy: Project Data Sheet (Nepali Translation) Translated PDS Apr 2014
Project Agreement for Project Preparatory Facility for Energy Project/Program Agreements Dec 2013
Grant Agreement (Special Operations) for Project Preparatory Facility for Energy Grant Agreement Nov 2013
Project Preparatory Facility for Energy Reports and Recommendations of the President Sep 2013
Project Preparatory Facility for Energy Gender Action Plans Aug 2013
Project Preparatory Facility for Energy Project/Program Administration Manual Aug 2013
Project Preparatory Facility for Energy Initial Poverty and Social Analysis Jul 2013

Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Title Document Type Document Date
Project Preparatory Facility for Energy Environmental Assessment and Review Framework Jul 2013
Project Preparatory Facility for Energy Indigenous Peoples Planning Frameworks/Indigenous Peoples Development Frameworks Jul 2013
Project Preparatory Facility for Energy Resettlement Frameworks Jul 2013

Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders


Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
CONSULTING SERVICES FOR POWER TRANSMISSION SYSTEM PLANNING FEASIBILITY STUDY AND PROJECT PREPARATION Grant 0361 02 Apr 2021 WAPCOS LIMITED | 2ND FLOOR PLOT NO. 57 SKV HOUSE SECTOR-18 GURUGRAM 122-015 HARYANA INDIA Ministry of Energy 1,202,122.68
CP3 - ENG AND ENV STUDY OF DAMAULI-KUSMA-BURTIBANG -BAFIKOT 400KV TRANSMISSION LINE AND ASSOCIATED Grant 0361 21 Nov 2019 POWERGRID CORPORATION OF INDIA LIMITED(INDIA) | PLOT-2 SECTOR-29 NEAR IFFCO CHOWK GURGAON HARYANA 122 001 INDIA Ministry of Energy 1,925,288.02
CP2 - ENG AND ENV STUDY OF BUDHIGANDAKI CORRIDOR (PHILIM-GUMDA-RATAMATE) 400KV TL AND 13KV DAILEKH- Grant 0361 20 Nov 2019 POWERGRID CORPORATION OF INDIA LIMITED(INDIA) | PLOT-2 SECTOR-29 NEAR IFFCO CHOWK GURGAON HARYANA 122 001 INDIA Ministry of Energy 2,143,965.39
CP1 - ENGINEERING AND ENVIRONMENTAL STUDY OF TINGLA HUB-LIKHU BUN-NEW KHIMTI-SUNKOSHI Grant 0361 20 Nov 2019 POWERGRID CORPORATION OF INDIA LIMITED(INDIA) | PLOT-2 SECTOR-29 NEAR IFFCO CHOWK GURGAON HARYANA 122 001 INDIA Ministry of Energy 1,956,362.17
CONSULTING SERVICES FOR DETAILED ENGINEERING DESIGN AND PREPARATION OF BIDDING DOCUMENTS FOR Grant 0361 12 Apr 2019 JV OF WAPCOS LIMITED AND NIPPON KOEI CO. LTD | 76-C INSTITUTIONAL AREA SECTOR 18 GURUGRAM HARYANA INDIA Ministry of Energy 2,070,094.39
KOHALPUR SURKHET UPPER KARNALI 400KV TL & KOHALPUR NEW BUTWAL 400KV TL Grant 0361 12 Jan 2018 ELC ELECTROCONSULT S.P.A. | VIA MAROSTICA 1 20146 MILAN ITALY ITALY Ministry of Energy 2,214,503.00

Procurement Plan