The project’s lead donor, the Asian Development Bank (ADB), will administer the Norwegian aid.
The project aims at increasing electricity access and help overcome power shortages in Nepal besides exporting surplus power to neighbouring India by strengthening and increasing the power transmission capacity and network in the country. It is by far the largest single project support by Norway to the energy sector of Nepal, according to the ADB.
The ADB and Norwegian Ministry of Foreign Affairs signed a co-financing agreement today.
Joint secretary of the Finance Ministry Madhu Kumar Marasini and ADB country director Kenichi Yokoyama signed the grant agreement in the presence of Norwegian ambassador Pettersen at the Finance Ministry, here today.
"We believe that the project will leverage private sector investment and extend access to energy services in Nepal," said Norwegian Ambassador to Nepal Kjell Tormod Pettersen during the signing of the co-financing agreement with ADB.
"It is in line with the Norwegian development policy on energy," he said, adding that there is also a clear focus on immediate poverty reduction in the project as it supports the extension of electricity distribution lines to more than 70,000 households in the transmission corridor.
"With several new hydropower projects coming on board in the next few years, the project is crucial in developing a robust and reliable transmission network allowing transfer of power to the main load centres for domestic needs as well as giving Nepal the ability to export at least 1,200 MW of electricity to India,” said Marasini, on the occasion.
"Access to electricity is vital for Nepal’s all round development," said ADB’s country director for Nepal Kenichi Yokoyama.
"The project – a priority initiative of SASEC – will help Nepal Electricity Authority (NEA) to substantially upgrade and expand transmission and distribution lines and substations," he said, adding that it will also help Alternative Energy Promotion Centre (AEPC) to provide electricity to rural communities with mini grid renewable energy systems.
The SASEC Power System Expansion project is expected to be completed by December 31, 2021. The renewable energy portion of the SASEC Power System Expansion project will be implemented by the AEPC and the components related to power transmission and distribution network improvement activities are to be implemented by NEA.
The grant from Norway will complement a $180 million loan from the ADB’s concessional resources of 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.
The project aims at increasing the mini grid-based renewable energy systems in off-grid areas and improve the management capacity of the NEA and the AEPC.
Under the power transmission and distribution capacity development component, approximately 45 km of 400 kV transmission lines and 192 km of 220 kV transmission lines along the Kali Gandaki Corridor and the 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 cent per cent electrification by assisting connection to marginalised households in the new distribution corridors.