Besides the ADB, the Japan International Cooperation Agency (JICA), European Investment Bank and Abu Dhabi Fund for Development are co-financing the project whose estimated cost is US$ 500 million. The 140 MW project is located in Tanahun district in western Nepal.
JICA has pledged soft loans worth US$ 180 million. European Investment Bank is also expected to provide a soft loan of US$ 70 million following the Cabinet’s decision to accept its loan. The government has to pay 0.1 percent interest to JICA and 1 percent interest to the ADB. After receiving the loans from these donors, the government will re-lend the money to the Nepal Electricity Authority (NEA) at 5 percent interest.
An ADB press release issued from its headquarters in Manila stated that the bank had decided to invest in the reservoir type project in order to help ease the energy crisis in Nepal. “Nepal has an energy crisis, and this is affecting badly economic prospects,” said Yongping Zhai, director of the energy division in ADB’s South Asia department. “This energy project is a means to stop this crisis.”
The bank said that Nepal’s electricity demand was growing at the rate of 10 percent a year, but lack of investment means supplies are not keeping up. “Blackouts of up to 18 hours a day in the dry season are common, even in the capital Kathmandu,” states the bank. “This forces businesses and households to use expensive and polluting diesel generators.”
The ADB said that besides building the plant and transmission system, the project would provide direct connections to at least 17,636 homes in the area of the hydropower plant to the national power grid. Only around one-third of the households in Nepal are connected to the electricity distribution grid, with the connection rate being much lower in rural areas.
“The hydropower plant’s construction will follow best international practices,” states the bank. “The ADB will ensure that the appropriate social and environmental rules, procedures and guidelines are adhered to.”
According to the bank, the project will also invest in health and education programmes as well as income and livelihood skills training for the local communities.
It added that the bank and its partners had carried out climate change impact modelling work on the project, and would do more assessments prior to its construction.
Another $15m for trade facilitation
KATHMANDU: The Asian Development Bank (ADB) has agreed to provide a grant assistance of $15 million (approximately Rs 1.26 billion) to Nepal for the implementation of the SASEC Trade Facilitation Programme. An agreement to this effect was signed and exchanged at the Finance Ministry on Monday. The main objective of the project is to increase intra-regional trade among the SASEC member countries — Bangladesh, Bhutan and Nepal — by reducing non-tariff barriers, namely institutional, administrative and technical barriers, to trade. The programme aims at providing efficient, effective, transparent, secure and service-oriented processing of cross-border trade in the sub-region. In order to achieve this outcome, the programme and its associated technical assistance will support activities under three thematic areas — modern and effective customs administration, streamlined and transparent regulations and procedures, and improved services and information for traders and investors, including women entrepreneurs. The agreement was signed by Madhu Kumar Marasini, chief of the International Economic Cooperation and Coord-ination Division at Finance Ministry and Kenichi Yokoy-ama, Country Director, Nepal Resident Mission of ADB.
Source : The Kathmandu Post