ADB plans to fund 3 power projects in Nepal

The Asian Development Bank (ADB) has said it plans to finance three major power projects — two hydropower plants and a new Nepal-India cross-border transmission line — in the next few years.

The two hydropower storage-type projects are the 300 megawatt Dudh Koshi Hydropower Project and the 410 megewatt Nalsing Gadh Hydropower Project.

The cross-border transmission line will be built under ADB's South Asia Sub-Regional Economic Cooperation (SASEC) Power System Expansion Project.

ADB's country director for Nepal Kenichi Yokoyama said the lender plans to fund Dudhkoshi subject to project readiness and progress in ongoing energy projects. The ADB provided grant assistance for the project preparation in 2013. Although the ADB has prioritized energy in its financing, poor performance in resources disbursement in the sector is a worrisome trend to make additional loan commitment, Yokoyama said.

According to Lila Nath Bhattarai, acting deputy managing director of Nepal Electricity Authority (NEA), tasks like detail engineering, preparation of bidding document, study of social and environmental aspects and selection of contractor, among others, are under way.

"Once these processes conclude, the project will go into the implementation phase," he said, adding the government was holding talks with the ADB for funding the project and was optimistic the project would be readied on time.

NEA has provided a grant worth US$12.5 million for studying the project. As per a study conducted in 1998, the project cost has been estimated at US$550 million. "Once we complete the study, we will ascertain the actual project cost," Bhattarai said. "We have expedited the study. We aim to award the construction contract by December 2015."

As far as Nalsing Gadh project is concerned, the ADB has said it is expected to be developed under the public-private partnership model based on consultations with the government. "However, the detailed modality is yet to be worked out," said Yokoyama. A detailed project report (DPR) is currently being prepared. "It will take around two and half years for us to complete the DPR. Whether to take financial support from the ADB will be known after that," Moti Bahadur Kuwar, executive director of Nalsing Gadh Hydropower Project Development Committee, said.

"The government is willing to fund the project on its own. If the government decides to go with multiple financers, we can consider the ADB's proposal," Kunwar said. The cost of the project is estimated at around 100 billion rupees (US$961.5 million). "However, the actual cost will be known only after the DPR is readied," Kunwar said.

As the country has only one storage-type project (Kulekhani), it is likely to face load-shedding in the dry season for a longer period. The government aims to ending the load-shedding during wet season by 2018, with a number of run-of-the-river type projects are expected to be completed by then. As for the transmission line project, it has been planned to be built as the second cross-border transmission line from Bardghat in central Nepal to Gorakhpur in India to export electricity from hydropower projects in the Kali Gandaki and other basins.

Source: China post