Grant to help Nepal overcome crippling power shortage

Kathmandu, Nov 14: The Norwegian government today extended a grant to fund the South Asia Sub-regional Economic Cooperation (SASEC) Power Expansion Project which aims to increase electricity access and help overcome power shortage in Nepal.

According to a press release, the Asian Development Bank (ADB) will administer a grant equivalent to Rs. 5 billion and 851 million from the Government of Norway for implementation of the SASEC Power System Expansion Project. 

The Asian Development Bank and the Norwegian Ministry of Foreign Affairs signed a co-financing agreement earlier today while the Grant Agreement was signed by Madhu Kumar Marasini, Joint Secretary, Ministry of Finance and Kenichi Yokoyama, ADB's Country Director for Nepal.

"With several new hydropower projects coming on board in the next few years, this project is crucial in developing a robust and reliable transmission network allowing transfer of power to main load centers for domestic needs as well as give Nepal the ability to export at least 1,200 MW of electricity to India," Joint Secretary Marasini said.

Norwegian ambassador to Nepal, Kjell Tormod Pettersen said that it was by far the largest single project support by the Norwegian government to the energy sector of Nepal adding, "We believe that the project will leverage private sector investment and extend access to energy services in Nepal."

Ambassador Pettersen said the project also focused on immediate poverty reduction as it supports the extension of electricity distribution line to more than 70,000 households in the transmission corridor. 

ADB's Country Director to Nepal Yokoyama said access to electricity was vital for Nepal's all round development. "This project, a priority initiative of SASEC, will help NEA to substantially upgrade and expand transmission and distribution lines and substations," he said, adding, "the project will also help Alternate Energy Promotion Centre (AEPC) to provide electricity to rural communities with mini grid renewable energy systems."

The grant from Norway will complement a $ 180 million loan from ADB's concessional resources (the Asian Development Fund); a loan of $120 million from the European Investment Bank; and a $11.2 million grant from the ADB administered Strategic Climate Fund, it is stated.

The Project aims to increase the mini grid based renewable energy systems in off-grid areas and improving the management capacity of Nepal Electricity Authority (NEA) and AEPC. Under the power transmission and distribution capacity development component, approximately 45 km of 400 kV transmission line, 192 km of 220 kV transmission lines along Kali Gandaki Corridors and Marsyangdi – Kathmandu route; will be constructed. Likewise, grid substations will be constructed, augmented and replaced in various parts of the country. The project will strive to achieve 100% electrification by assisting connection to marginalized households in the new distribution corridors.

The project also aims to export surplus power to neighbouring India by strengthening and increasing the power transmission capacity and network in the country. The SASEC Power System Expansion project is expected to be completed by 31 December 2021.

The Nepali government has expressed its sincere appreciation to the Government of Norway for the grant assistance and its continued support in the socio-economic development of Nepal," the statement said. The government also lauded ADB for its assistance and continued support in the country's socio-economic development. RSS