NEA Urges AIIB for Increased Investment in Electricity Infrastructure Projects

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Kathmandu, 26 March 2024. The Nepal Electricity Authority has requested the Asian Infrastructure Investment Bank (AIIB) to increase investment in electricity infrastructure improvement and expansion projects. R.M. P. Rathnayak, the leader of the AIIB Executive Committee, along with members of the Bank’s Management Committee who are on a visit to Nepal, met with the authority’s Managing Director Kulman Ghising on Monday. During the meeting, there was an urging to enhance investment in the improvement, expansion, and affordability of electricity transmission and distribution infrastructure.

Briefing the delegation about the outline of Nepal’s energy sector and investment needs, Managing Director Ghising said that a large investment is needed to build production, transmission and distribution structures for adequate, reliable, quality and safe electricity supply, to expand electricity trade with neighboring countries.

Ghising informed the delegation of AIIB about the current work in the areas of ensuring reliable and quality electricity supply, energy transition and efficiency, increasing electricity export, construction of reservoir projects, expansion and improvement of distribution and transmission operations to reduce the imbalance of seasonal electricity production.

The delegation said that the bank is willing to make necessary investments for the energy sector. The delegation asked questions about the progress of projects currently under construction with AIIB’s investment, environmental and social protection issues, restructuring of the energy sector, market assurance for electricity exports, etc.

On behalf of Nepal, Mr. Shree Krishna Nepal, a member of the AIIB Board of Directors and Joint Secretary, Head of International Financial Aid Coordination Division of the Ministry of Finance, stressed on the need to provide subsidized loans at low interest rates from banks for the development of the energy sector.

Currently, AIIB has provided a concessional loan of 112.3 million dollars to Nepal for the implementation of electricity distribution system improvement and expansion projects. The subsidized loan obtained through the project is being spent on the expansion and improvement of the electrification and distribution system of Dang, Banke Bardia and Rolpa of Lumbini Province and 8 districts of Karnali Province.

From the project, 19 33-11 KV distribution substations, 350 km of 233 KV lines, 1798 km of 11 KV lines, 3159 km of LT lines will be constructed and 1045 distribution transformers will be installed. The contract agreement and project design have been completed for the implementation of the project.

The 216 megawatt Upper Trishuli-1 hydropower project under construction in Rasuwa has been provided a loan of 40 million dollars by AIIB under the leadership of a Korean company.