fbpx 50059-003: South Asia Subregional Economic Cooperation Power Transmission and Distribution System Strengthening Project | Asian Development Bank

Nepal: South Asia Subregional Economic Cooperation Power Transmission and Distribution System Strengthening Project

Sovereign (Public) Project | 50059-003 Status: Approved

The proposed project will complete the reinforcement and modernization of the power supply system in and around Kathmandu in Bagmati Province. This project will begin strengthening distribution systems outside of Kathmandu in a systematic and phased manner starting with the Bharatpur metropolitan area of Chitwan district in Bagmati Province and Pokhara of Kaski district in Gandaki Province, where supply interruptions are frequent and prolonged. The project will also support Province 2, where the quality of electricity supply is poor and about 20% of households are still without access to the national grid. Further, the project will strengthen transmission lines for evacuation of hydropower to the main load center, Kathmandu, and other load centers, while excess power is traded with neighboring countries.

Project Details

Project Officer
Acharya, Jiwan S. South Asia Department Request for information
Country
  • Nepal
Sector
  • Energy
 
Project Name South Asia Subregional Economic Cooperation Power Transmission and Distribution System Strengthening Project
Project Number 50059-003
Country Nepal
Project Status Approved
Project Type / Modality of Assistance Grant
Loan
Technical Assistance
Source of Funding / Amount
Grant 0711-NEP: South Asia Subregional Economic Cooperation Power Transmission and Distribution System Strengthening Project
Government of Norway US$ 35.00 million
Loan 3943-NEP: South Asia Subregional Economic Cooperation Power Transmission and Distribution System Strengthening Project
concessional ordinary capital resources lending / Asian Development Fund US$ 200.00 million
TA 6526-NEP: South Asia Subregional Economic Cooperation Power Transmission and Distribution System Strengthening Project
ATF - Norway TA Grant US$ 5.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Energy / Electricity transmission and distribution

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The proposed project will complete the reinforcement and modernization of the power supply system in and around Kathmandu in Bagmati Province. This project will begin strengthening distribution systems outside of Kathmandu in a systematic and phased manner starting with the Bharatpur metropolitan area of Chitwan district in Bagmati Province and Pokhara of Kaski district in Gandaki Province, where supply interruptions are frequent and prolonged. The project will also support Province 2, where the quality of electricity supply is poor and about 20% of households are still without access to the national grid. Further, the project will strengthen transmission lines for evacuation of hydropower to the main load center, Kathmandu, and other load centers, while excess power is traded with neighboring countries.
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. Its gross national income per capita was only $960 in 2018. With deepening economic uncertainties due to the coronavirus disease (COVID-19) pandemic, compounded by social and health emergencies, the Government of Nepal is facing greater difficulties in pursuing an accelerated growth path for Nepal to become a lower middle-income country by 2030, with a per capita gross national income of at least $1,026. The Government of Nepal has long recognized that the development of its large hydropower potential is an important cornerstone for poverty reduction and economic growth.

Following years of facing chronic electricity shortages, especially during dry winter months (October to March), Nepal made significant improvements in electricity supply during fiscal year (FY) 2017 and FY2018. These improvements were achieved through a combination of (i) increased electricity imports from India of about 400 megawatts (MW); (ii) improved transmission capacity and operational flexibility by commissioning new transmission facilities; and (iii) better load management involving major industrial customers. While there is currently no significant gap between electricity demand and supply, the transmission and distribution systems need further strengthening to increase network capacity and redundancy and to eliminate any bottlenecks between generation hubs to load centers. Also, although 78% of Nepal's population has access to grid-supplied electricity, the distribution systems require immediate upgrading and expansion to improve the reliability and quality of supply and to facilitate expected future demand growth. These investment requirements over the next 10 years until 2030 are beyond the budgetary resources of the government. At the same time, the investment environment in the sector, including regulation, is not sufficiently mature to attract private sector capital and participation at the level required, particularly in the transmission and distribution subsectors. In summary, the ongoing energy sector challenges in the power system can be characterized by (i) limited generation capacity, especially during the dry season; (ii) insufficient transmission and distribution network capacity; (iii) high technical and commercial losses because of deteriorated and under-capacity network assets, poor billing practices, and collection inefficiencies; (iv) inadequate tariffs impinging upon the ability of Nepal Electricity Authority (NEA) to maintain and expand its network to meet growing demand for electricity; and (v) lack of institutional capacity to prepare and implement energy projects using high-level technologies effectively.

The government recognizes the continued need for physical investment in electricity supply infrastructure. These investments are critical to satisfy the country's power supply needs in the longer term and to provide universal access to reliable electricity supply by 2030. These investments will also contribute to promoting sustainable energy for all (Sustainable Development Goal 7: ensure access to affordable, reliable, sustainable, and modern energy for all) and to achieving Nepal's Nationally Determined Contributions to the United Nations Framework Convention on Climate Change to reduce the country's dependency on fossil fuel by 50%. The focus of Nepal's power system investment program is now gearing toward delivering a reliable and high-quality supply of electricity to domestic consumers and positioning the country to become a net energy exporter. In 2018, the Government of Nepal initiated plans to install an additional 15,000 MW of generation capacity by 2028 to meet domestic demand and to export surplus electricity to India and also to Bangladesh. In this regard, the government will support the construction of selected storage-type hydropower plants while encouraging the private sector to invest in run-of-river hydropower projects and other renewable energy sources.

Impact Reliable and efficient electricity for all by 2030 achieved (National Energy Crisis Reduction and Electricity Development)
Project Outcome
Description of Outcome Access, reliability, efficiency of power supply in Nepal improved
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Power system transmission capacity increased

System losses reduced to 25% in Province 2

(2017 baseline: 31.3%)

Annual per capita electricity consumption in Nepal increased to 700 kWh by 2028

(2018 baseline: 198 kWh)

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
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 A project supervision consultant will be hired to support NEA in implementing the project. 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). As requested by NEA, advance contracting and retroactive financing will be considered, subject to a ceiling of 20% of the loan amount and a time limit of not more than 12 months prior to the date of the respective loan agreement.
Procurement The EA has been implementing ADB projects and has a PMD in place. Under the PMD, a Project Management Unit will be established and supported by project management consultants. Project procurement classification B is appropriate
Responsible ADB Officer Acharya, Jiwan S.
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Nepal Electricity Authority (NEA)
P. O. Box 5352
Kathmandu
Nepal
Timetable
Concept Clearance 03 Oct 2019
Fact Finding 21 Oct 2019 to 25 Oct 2019
MRM 25 Feb 2020
Approval 26 Jun 2020
Last Review Mission -
Last PDS Update 26 Jun 2020

Grant 0711-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Jun 2020 - - 30 Jun 2026 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 35.00 Cumulative Contract Awards
ADB 0.00 26 Jun 2020 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 35.00 26 Jun 2020 0.00 0.00 0%

Loan 3943-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Jun 2020 - - 30 Jun 2026 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 287.00 Cumulative Contract Awards
ADB 200.00 26 Jun 2020 0.00 0.00 0%
Counterpart 87.00 Cumulative Disbursements
Cofinancing 0.00 26 Jun 2020 0.00 0.00 0%

TA 6526-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Jun 2020 - - 31 Jul 2025 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 5,000,000.00 0.00 0.00 0.00 0.00 5,000,000.00 26 Jun 2020 0.00

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.

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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.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

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Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.