Nepal: Power Transmission and Distribution Efficiency Enhancement Project

Energy / Electricity transmission and distribution - Energy efficiency and conservation

Electricity is a necessary requirement for accelerating the economic development of any country and is considered an important input to improve quality of life. Overall, the electricity demand has far outgrown the supply, leading to load curtailment and increased dependence on imports from India in recent times. The peak suppressed demand in Nepal in FY2013 2014 has been around 1,200 megawatt (MW) as against installed capacity of 787 MW, hence resulting in a deficit of about 440 MW due to non-availability of generation. Government has plans to generate additional 10,000 MW in the next 10 years. About 63% of the population in Nepal has access to electricity but the supply quality is unreliable and inadequate. The government has recognized the immediate need for reinforcement and upgrade of outdated distribution systems crucial to deliver the required energy to the customers even if the generation and transmission lines are in place. In this regard, the need for immediate distribution network enhancement is included in the government's action plan to address energy crisis and provide universal access to reliable and efficient electricity for all by 2030. This will contribute in promoting sustainable energy for all (Sustainable Development Goal #7) and Nepal's Intended Nationally Determined Commitments for the United Nations Framework Convention on Climate Change.

ADB's Nepal country partnership strategy 2013 2017 supports the government's development objective of accelerated and inclusive economic growth. It seeks to address the infrastructure bottlenecks in the key areas such as energy services and creating an enabling environment for increased business and employment opportunities. ADB's support for the energy sector in Nepal has largely focused on generation and transmission with some distribution extension. This project will be ADB's first investment in Nepal specifically targeting energy efficiency through distribution system enhancements measures.

Transmission grid capacity to feed the primary distribution networks for the Kathmandu Valley strengthened

Kathmandu Valley distribution network rehabilitated and capacity increased

Operational and financial performance of NEA distribution centers enhanced

NEA's capacity to operate and manage an advanced distribution system and intelligent network (smart grid) technology with GESI aspects in electricity access and end-user awareness programs developed

Preliminary works are ongoing in Changunarayan, Teku and Suichatar substations with the achievement of 7.42% physical progress. Work has been disrupted in Lapsiphedi due to obstruction from local communities. Work ongoing for construction of 220 kV substation in Barhabise with the overall progress of 33.24%. Similarly, works progressing in Phutung, Chovar, and Thimi substations under the 132 kV GIS substation in Kathmandu Valley contract with an overall progress of 23.27%. Works under design, supply, installation and commissioning of underground distribution network under Maharajgunj distribution center is ongoing with an overall physical progress of 46.58%. 46 Km of trench works, laying of 318 km of HDPE pipes, and 210 km of cables have been completed.

Similarly, works under design, supply, installation, and commissioning of underground distribution network contract under Ratnapark distribution center is ongoing with physical progress of 42.35%. By September 2021, 39.4 km of trench work, 238.6 km of HDPE pipe laying, and 160.4 km of cable laying works completed; and installation of RMU is ongoing. Under the smart metering subproject, the installation of smart meters is keeping its pace with overall physical progress of 95.4%. Total 86,540 smart meters have been installed against the planned 98,000. Rebidding is ongoing for procurement of the distribution transformers package. Utility management training was provided to senior managers and officers of NEA. Similarly, training on the new technological application was provided to NEA engineers. The NEA board has approved GESI strategy and operational guidelines, and it is under implementation.

All procurement of goods will be undertaken in accordance with ADB's Procurement Guidelines 2015, as amended from time to time. Before start of any procurement, ADB and the government will review the public procurement laws of the central and state governments to ensure its consistency with ADB's Procurement Guidelines 2015, as amended from time to time.

The procurement scope under the project will be limited to procurement of goods for the substations, distribution system enhancement and smart meters. International Competitive Bidding (ICB) procedures would be adopted where the estimated tender value is above the threshold limit as defined in the procurement Plan, and National Competitive Bidding (NCB) procedures may be adopted for bids with an estimated value up to the threshold limit. NEA has sufficient capacity to design and implement these activities. NEA has also demonstrated good performance and track record with procurement of goods and works other similar activities and has sufficient knowledge of NCB procedures.