Nepal, ADB sign loan and grant agreements amounting to Rs 105.59 billion

The government and the Asian Development Bank (ADB) today signed loan and grant agreements amounting to $777.6 million (equivalent to Rs 105.59 billion), at the Finance Ministry, for the implementation of three projects and a programme.

The Financing agreement for the implementation of Kathmandu Valley Water Supply Improvement Project (phase 2), South Asia Subregional Economic Cooperation (SASEC) Electricity Transmission and Distribution Strengthening Project and Green, Resilient and Inclusive Development (GRID) Programme were signed, according to a press note issued by the Finance Ministry.

Finance secretary Dr Ram Prasad Ghimire and Country Director of the Nepal Resident Mission ADB, Arnaud Cauchois signed the agreement on the behalf of the government and ADB, respectively.

The project—Kathmandu Valley Water Supply Improvement Project (phase 2) aims to secure safe and reliable water supply services for people in the Kathmandu Valley, the press note reads, adding that tt includes the relocation and construction of the Melamchi intake, construction of long tunnel and the expansion of the Sundarijal Water Treatment Plant.

The project cost of Kathmandu Valley Water Supply Improvement Project (Phase 2) will be $240 million (equivalent to Rs 32.59 billion). The ADB will support $15 million (equivalent to Rs 2.03 billion) grant and $170 million (equivalent to Rs 23,08 billion) concessional loan, Japan Fund for Prosperous and Resilient Asia and Pacific (JFPR) will support $3 million (equivalent to Rs 407.46 million) grant and the government contributes $52 million (equivalent to Rs 7.06 billion) for it, it adds.

Similarly, the project—SASEC Electricity Transmission and Distribution Strengthening Project focuses on meeting Nepal's growing energy demands while supporting green electricity exports. It will be $537 million (equivalent to Rs 72.93 billion). ADB will support $30 million (equivalent to Rs 4.07 billion) grant and $311 million (equivalent to Rs 42.24 billion) concessional loan, EU will support $22.6 million (equivalent to Rs 3.06 billion) grant, Norway will support $31 million (equivalent to Rs 4.21 billion) grant, Strategic Climate Fund will support $10 million (equivalent to Rs 1.35 billion) and the government contributes $132.4 million (equivalent to Rs 17.98 billion) for the execution of this project.

The construction of 290 kilometers of transmission lines, five new substations, and the upgrading of two existing ones are key components of this project, the press note adds.

Likewise, the GRID programme aims to assist in implementing the Green, Resilient and Inclusive Development approach by addressing policy, regulatory and institutional barriers to unlock sustainable investment opportunities across various sectors. The programme's objective is to ensure that development activities are environmentally sustainable, resilient and inclusive.

The ADB will support $100 million (equivalent to Rs 13.58 billion) for GRID Programme as a budget support.

The Irrigation Modernization Enhancement Project (IMEP) focuses on modernising surface water irrigation systems of Nepal and piloting hill lift irrigation. It will directly benefit families of project area enhancing agricultural productivity and climate resilience.

After signing the agreement, finance secretary Ghimire expressed his heartfelt appreciation to ADB for its consistent support and partnership. He emphasised that these initiatives would not only improve irrigation system, water security and agriculture but also strengthen climate resilience in Nepal's most affected communities and contribute to achieving sustainable development goals.

Country Director of ABD Arnaud Cauchois, on the occasion, emphasised the key features of these projects, including their financing structures and significance for Nepal's economy.

He reiterated ADB's strong commitment to supporting Nepal's development priorities, particularly in climate adaptation, agricultural productivity and water resources management and support to achieve SDGs.

Improved performance key for development results: ADB director general Yokoyama

The Asian Development Bank (ADB) director general for South Asia Kenichi Yokoyama said improved portfolio performance is key for timely delivery of development results and securing higher and sustained concessional resource allocations.

“The Finance Ministry is proactively addressing issues to improve project implementation,” he said, speaking at the opening session of a 2-day country portfolio review meeting organised by the government and ADB to assess the progress of ADB-supported development projects today.

“Nepal needs to achieve at least $350 million to $450 million disbursement per year to be considered for higher concessional resource allocations based on ADB’s performance-based allocation system,” he said, adding that higher disbursement is doable with collective efforts of the government and ADB by pursuing higher implementation disciplines.

Finance Minister Dr Prakash Sharan Mahat chaired a session on sector and project performance, attended by secretaries of the government, senior officials, project directors, and staff from ADB’s Nepal Resident Mission. 

“We appreciate ADB’s support to Nepal’s development over the years,” said the finance minister Dr Mahat. “The government is committed to overcome the challenges related to project implementation and disbursements and improve capital expenditure for development impact on the ground for Nepali people.”

At a special ceremony held in conjunction with the meeting, revenue secretary Ram Prasad Ghimire presented awards to ADB-supported projects for their excellence in effective project management, gender equality, and social inclusion, environmental and social safeguards monitoring. The projects that were awarded include Urban Water Supply and Sanitation (Sector) Project, Bagmati River Basin Improvement Project-Additional Financing, SASEC Highway Improvement Project, Rural Enterprise Financing Project, and Power Transmission and Distribution Efficiency Enhancement Project. 

As of December 31, 2022, ADB’s active portfolio in Nepal stands at around $3.2 billion supporting a broad range of key sectors: energy, transport, agriculture, water and urban infrastructure and services, rural development and natural resources, health, and education, according to the multilateral development partner. 

“In 2022, the overall portfolio performance in Nepal was lower than expected affected mainly due to insufficient project staff and high turnover, challenges in contract management, delays in environmental and land clearances, and disruption of construction supply chain,” said ADB country director for Nepal Arnaud Cauchois. “Following the review, Finance Ministry and ADB will agree on specific actions to overcome the challenges and we are hopeful that project implementation and disbursement will pick up pace.”

Since the start of its operations in Nepal in 1969, ADB has provided about $7.6 billion in financial and technical assistance to the country. 

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members — 49 from the region.

Government, ADB sign $200 million concessional loan agreement

 The government and Asian Development Bank (ADB) signed $150 million concessional loan agreement to finance South Asia Sub regional Cooperation (SASEC) Airport Capacity Enhancement Project and $40 million concessional loan and $10 million grant for the implementation of Priority River Basins Flood Risk Management Project.

Joint secretary at the Finance Ministry Shreekrishna Nepal signed the agreement on behalf of the government whereas officer- in-charge of Nepal Resident Mission at the ADB Rudi Louis Hendrikus Van Dael signed the agreement on behalf of ADB.

According to the agreement, ADB will provide concessional loan worth $150 million for the said Airport Capacity Enhancement Project. The project will enhance the airport capacity by constructing Parallel Taxiway Extension, Hanger Apron, Next Phase work Design of TIA and Construction of second terminal building at Gautam Buddha Airport (GBA), a press note issued by the ADB reads, adding that ADB will provide concessional loan worth $40 million and $10 million grant for said Priority River Basins Flood Risk Management Project. “The project will contribute to improve flood protection infrastructure, enhanced flood forecasting and response system and improve flood prevention and preparedness capacity.”

Addressing the signing ceremony, held in the Finance Ministry, joint secretary Nepal said that the implementation of these programmes will significantly contribute to the national economy by increasing the existing capacity of Nepal's airspace and flood protection infrastructure. He appreciated ADB for its continued support to Nepal’s infrastructure development, which has been crucial for the socio-economic development of Nepal.

He also thanked ADB for its valuable support in the socio-economic development of Nepal and wished the bank to continue its similar support going forward.

Likewise, on his concurrent remarks ADB officer-in-charge Rudi reflected on the necessity of this concessional loan saying, “Both projects can contribute to delivering important results to the people of Nepal.”

The flood risk management project will improve disaster resilience and make lives safe, he said, adding that the airport project will contribute to improve connectivity, leading to economic growth, once the pandemic is stabilized..

The loan agreement is said to be effective after 90 days of the signing of this agreement.

ADB approves $200 million concessional loan

The Asian Development Bank (ADB) has approved a $200 million concessional loan to improve power supply and distribution systems in Nepal.
Nepal has made significant progress in electricity supply after years of chronic power shortages. However, its power transmission and distribution systems need further strengthening to increase network capacity, improve quality and reliability, and remove delays between generation hubs and load centers, according to a press note issued by the multinational development partner.
The project will finance, among others, the reinforcement and modernisation of the power supply system in Kathmandu Valley, Bharatpur metropolitan area of Chitwan district in Bagmati Province and Pokhara of Kaski district in Gandaki Province, where supply interruptions are frequent and prolonged, the press note reads, adding that the project also aims to support Province 2, where the quality of electricity supply is poor and about 20 per cent of households are still without access to the national grid.
“The project will help sustain Nepal’s improved electricity supply momentum over the past two years,” ADB Principal Energy Specialist Jiwan Acharya said, adding that it will facilitate meeting future demand from commercial and industrial activities as well as from communities, particularly women, who can now benefit from electricity-based enterprises and focus on productive economic and social activities. “It is also very timely because the project will create employment opportunities for skilled and unskilled labor during the construction phase as the country adopts measures to mitigate the socioeconomic impact of the coronavirus disease (Covid-19) pandemic.”
Complementing ADB’s loan, the Government of Norway is providing a $35 million cofinancing grant for the installation and upgrading of power distribution networks in Province 2 and various substations to evacuate hydropower in the country. In addition, it is providing a $5 million technical assistance grant for capacity development of the Nepal Electricity Authority (NEA) to ensure that gender equality and social inclusion are strengthened, and new technologies are used to make electricity infrastructure resilient.
The project is aligned with the South Asia Subregional Economic Cooperation (SASEC) programme on intraregional power trade through cross-border power exchange. The upgrading of substations in Khimti, Barhabise, and Lapsiphedi to 400 kilovolts (Kv) will facilitate cross-border power exchange with India.
ADB and other development partners have been engaged in Nepal’s power system reform efforts, including the approval of the Nepal Electricity Regulatory Commission Act of 2017, which created the Electricity Regulatory Commission as an independent regulatory body with respect to tariff-setting and consumer protection.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members, 49 from the region.

ADB registers record disbursement

The Asian Development Bank (ADB) achieved a record disbursement of $323.7 million for development projects in Nepal in 2019. Some of the projects contributing to 2019’s record disbursement include the Earthquake Emergency Assistance Project ($38.5 million), the South Asia Subregional Economic Cooperation (SASEC) Power System Expansion Project ($28.7 million), Food Safety and Agriculture Commercialisation Programme ($25 million), Regional Urban Development Project ($22.1 million), Rural Connectivity Improvement Project ($20.2 million), and Supporting School Sector Development Programme ($20 million).
“ADB’s support to Nepal in the infrastructure sector has increased in the recent years with larger but fewer projects,” said ADB country director for Nepal Mukhtor Khamudkhanov, speaking at a country portfolio review meeting jointly organised by ADB and the Finance Ministry today. “But while disbursement has picked up pace, challenges remain and the overall performance of ADB operations in Nepal could be much better.”
“For better and quicker results on the ground, higher lending needs to be matched with improved implementation and enhanced technical capacity of implementing agencies,” he said, adding that difficult terrain and remoteness of project sites, addressing safeguards issues, and the country’s ongoing transition to federalism that takes time have also posed challenges in effective implementation of development programmes. “We appreciate the consistent efforts by the Finance Ministry to progressively address risks and constraints through regular country and tripartite portfolio review meetings, with active participation of line ministries and relevant agencies.”
At a special ceremony held in conjunction with the meeting, finance secretary Sishir Kumar Dhungana presented awards to ADB-supported projects that showed excellent results in 2019.
The Third Small Towns Water Supply and Sanitation Sector Project and Community Managed Irrigated Agriculture Sector (Additional Financing) won the outstanding project management teams awards. The Urban Water Supply and Sanitation Sector Project was awarded the best team for procurement management prize. Likewise, the SASEC Power System Expansion Project received the best team award in the categories of environmental and social safeguard monitoring; the Third Small Towns Water Supply and Sanitation Sector Project won the gender equality and social inclusion award; and the SASEC Road Connectivity Project bagged the financial management and disbursement accolade.
“These awards recognise the project teams' excellence not only in effective project management which helped save time and prevent cost overruns, but also prioritise gender equality and social inclusion, as well as environmental sustainability and social safeguards,” Khamudkhanov added.
Since the start of its operations in Nepal in 1969, ADB has provided about $6 billion in financial and technical assistance to the country. The assistance provided by ADB to date focus on the energy, transport, urban development, water supply and sanitation, agriculture and irrigation, education sectors, among others.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members, 49 from the region.

ADB gives $358 million loan for four new projects

The Asian Development Bank (ADB) and Nepal today signed a $358 million loan in total for four new projects.
The signing included a loan of $195 million to improve the highway section between Pokhara and Mugling, a $63 million loan in additional financing to improve flood management and river health in Nepal’s polluted Bagmati River Basin, a $50 million loan to improve the livelihoods and increase incomes of small farmers in Nepal and a $50 million policy-based loan to support the government’s reforms in agriculture and food safety.
At the Finance Ministry, finance secretary Rajan Khanal and ADB country director for Nepal Mukhtor Khamudkhanov signed the agreements on behalf of their respective institutions. “We thank ADB for its support to key sectors of the economy, including infrastructure, agriculture and rural finance,” Khanal said, adding that ADB’s support to Nepal’s reform initiatives in important sectors is also highly appreciated. “All these are very important projects for Nepal and will support the government’s plan for a more inclusive sustainable development of the country.”
“Over the years, ADB has significantly scaled up its development assistance for Nepal and this shows that our partnership with Nepal continues to grow stronger,” Khamudkhanov  said, on the occasion. “Nepal can further tap the opportunities of increased lending space provided by ADB with improved portfolio performance, and we appreciate the efforts taken by Nepal government in that direction.”
Under the SASEC Mugling-Pokhara Highway Improvement Project, 81-km of the road will be widened to four lanes from Pokhara to Abukhaireni to meet increasing demand. Improvements will be made to the surfacing, structure, and drainage, with safety features such as crash barriers, and traffic and other warning light systems installed.
The additional funds for the Bagmati River Basin Improvement Project will finance an additional 5.75-km of riverbank beautification in the heart of Kathmandu city, construct a wastewater treatment plant integrated into the landscape to treat a polluted tributary flowing into the Bagmati River, construct and equip a new regional building for the river basin office, and provide funds to train communities along the river on flood early warning systems.
The Food Safety and Agriculture Commercialisation Programme, comprised of a two-tranche, standalone policy-based loan, will improve food safety and quality monitoring systems in Nepal, particularly in enhancing the regulatory and institutional capacity for sanitary and phytosanitary monitoring.
The Rural Enterprise Financing Project will help improve rural enterprises’ and cooperatives’ access to finance, addressing the low appetite of formal financial institutions in financing rural enterprises, a press note from the multilateral development partner reads, adding that it will help to raise small farmers’ incomes and improve their livelihoods.

Pokhara-Muglin highway to be widened to four lanes

The Asian Development Bank (ADB) has approved a loan of $195 million to improve the highway section between Pokhara and Mugling, which links Pokhara to Kathmandu and to subregional corridors connecting Nepal with India and Bangladesh.
“The project will boost the traffic capacity, reliability, and safety of the main road link from Pokhara,” said ADB transport specialist Johan Georget. “The highway will be widened to four lanes, and this will reduce travel times, lower transport costs, and improve access to domestic markets, jobs, and social services,” he said, adding that the upgraded highway will also open a wider gateway for Nepal to international markets, especially in India, and facilitate the arrivals of tourists to the region of Pokhara and its hinterland.
The project is part of a major trade corridor and feeder roads of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC), linking Kathmandu with Dhaka and Chittagong through India.
As a landlocked country, Nepal relies heavily on direct neighbours for international trade, mainly India, which traded 65 per cent of Nepal’s imports and exports. But while roads are the predominant mode of transport in Nepal for more than 90 per cent of goods and passengers, the density and capacity of the road network remains low. This infrastructure deficiency hampers the economy, resulting in high operating costs and travel times, and impeding the development of competitive supply chains, tourism, and regional integration and trade.
Nepal’s economic growth improved to 7.3 per cent a year on average between fiscal years 2017 and 2019, compared with about 3.3 per cent in the previous three fiscal years. The
The 200-kilometer (km) journey from Pokhara – a prime tourist destination at the foot of the Himalayas – to the capital Kathmandu takes more than 5 hours by road. It is currently a two-lane highway that handles about 7,400 vehicles a day. As the number of vehicle registrations has been rising and total vehicles are expected to quadruple by 2029, upgrading national highways is a priority to support economic development.
Under the project, 81-km of the road will be widened to four lanes from Pokhara to Abukhaireni to meet increasing demand. Improvements will be made to the surfacing, structure, and drainage, with safety features like crash barriers, and traffic and other warning light systems installed. A second 8-km section between Mugling and Abukhaireni will be considered for a subsequent project.
The road will be divided by a median, while service lanes in urban areas will improve safety, especially for pedestrians, bicycles, and motorcycle users. This is especially important since the country suffers a high rate of almost 16 deaths per 100,000 people due to traffic. Performance-based maintenance contracts of 5 years will strengthen road management and maintenance. The project will also install a landslide monitoring and management system to strengthen disaster resilience, according to a press note issued by the Asian Development Bank (ADB).
The total cost of the project is $254 million, of which the government will provide $59 million, it reads, adding that the project is due for completion at the end of 2025. “Accompanying the loan is an ADB technical assistance grant of $500,000 to strengthen disaster risk reduction, landslide management, road safety, and procurement in the Ministry of Physical Infrastructure and Transport and Department of Roads.”
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members, 49 from the region.

Nepali Officers to train in India on AML/CFT

The second group of 18 government officers has started their training on ‘Anti-Money Laundering and Countering Financing of Terrorism’ (AML/CFT) at the National Academy of Customs, Indirect Taxes and Narcotics (NACIN) in Bengaluru of Karnataka state in India.
This is a special tailor-made course designed at the request of Nepal for a total of 60 officers,” reads a press note issued by the Indian Embassy in Kathmandu. “It is an example of Government of India’s commitment to enhance the capacities of various agencies of the Nepal,” it reads, adding that the course is fully supported by the Government of India under the Ministry of External Affairs’ Indian Technical and Economic Cooperation (ITEC) Programme. “The training will enhance the capabilities of participating officers to effectively deal with the matters pertaining to Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT).”
The first group of 20 Nepali officers had successfully completed their 6-days training module on August 24. The third batch of 21 officers will undergo training in December.
The NACIN is a premier training institute of Government of India in the field of financial investigations and anti-money laundering matters with state-of-the-art learning facilities. “It is an accredited Regional Training Centre of World Customs Organisation (WCO) for Asia-Pacific Region and also works in collaboration with other international organisations including UNEP, UNODC and SASEC.

India trains Nepali officials on AML-CFT

On the request of Nepal government, a customised six-day training course on ‘Anti-Money Laundering and Countering Financing of Terrorism' (AML/CFT) for Nepali officers has commenced from today at the National Academy of Customs-Indirect Taxes and Narcotics (NACIN) in Faridabad of India.
According to a press note issued by the Indian Embassy in Kathmandu, the training is fully supported by the Indian government under the Indian Technical and Economic Cooperation Programme. “It is yet another example of the Indian government’s commitment to supporting the capacity development of Nepali officers.”
The 20 Nepali officers from various departments and ministries are taking part in the training, it reads, adding that a total of 60 officers from various regulatory agencies in Nepal will be trained under this latest initiative.
The next two batches of 20 officers each will be trained at NACIN in October and December 2019, the note reads, adding that the initiative is likely to enhance the capacities of agencies of Nepal on the matters of Anti Money Laundering and Countering Financing of Terrorism.
NACIN is the apex training institution of the Government of India in the field of financial investigations and anti money laundering matters. It is an accredited Regional Training Centre of World Customs Organisation for Asia/Pacific Region and also works in collaboration with other international organisations including UNEP, UNODC and SASEC.

Stop politicisation of development projects: ADB

One of Nepal's important development partners has asked the government to stop politicisation in development activities.
Addressing the first Tripartite Portfolio Review Meeting (TPRM) of the year 2017 country director of ADB Nepal Resident Mission Kenichi Yokoyama today asked the political parties to refrain from or abandon "the practice of so-called 'bhagbanda' – division of spoils – by all means, to ensure timely project execution."
Saying that the ADB-funded projects have shown notable improvement in the year 2016, he attributed the success to project readiness, project leadership and human resources, procurement, contract management, safeguards, and addressing complex local issues. "Nevertheless, we must also say that the progress is just half way through, compared with our target of making annual execution – contract awards and disbursement – at par with annual lending – new commitment – level of $300 million in recent years,” he said, highlighting the critical importance of having competent project directors.
"Specifically, there is very high correlation between the strong project leadership and the performance of the project, ie, project performance is stronger where it is led by a competent project director," he added. "The rapid progress of flagship projects such as Melamchi and SASEC power and transport projects are testament to this."
He also asked the two-day TPRM to discuss and agree on critical issues related with high-attention projects, like ensuring timely completion of the Melamchi and Kathmandu water distribution projects to deliver water to Kathmandu by October 2017, while advancing reforms of Kathmandu Uptyaka Khanepani Ltd (KUKL) and addressing environmental concerns and bringing the problem projects like Tribhuwan International Airport (TIA) that is under deep trouble despite urgency of completing the works amidst heavy air traffic congestion, back on track; among others.
In 2016, ADB's Nepal portfolio's financial performance in terms of contract award totaled $359 million and disbursement totaled $202 million, both highest in ADB's operational history in Nepal.
"Enhanced readiness of new projects and strong project leadership in some projects has contributed to this achievement," DDG at the ADB South Asia Department Diwesh Sharan said on the occasion.
ADB's portfolio in Nepal is growing; and as of end 2016, cumulative assistance, since its operation in 1969 in Nepal, stands at $4.9 billion and the active net portfolio stands at almost $2 billion for 34 investment projects. "Clearly, Nepal's portfolio performance has improved. However, challenges remain," he said, adding, "Of the active portfolio, 44 per cent or $883 million is uncontracted and $1.3 billion remains undisbursed."
It is the lowest as a percentage of the active portfolio (66 percent), and compares well with the ADB average (for 2015) of 44 per cent and 64 per cent, respectively, he added.
The corresponding contract and disbursement ratios were 30.5 per cent and 16.1 per cent, respectively. "However, given the pending amounts to be committed and disbursed, we are all here to collectively and very specifically, identify the issues project by project, and agree on actions to improve project implementation," Sharan added.
Nepal's performance has improved steadily in recent years but challenge remains, he said, asking stakeholders to focus on efforts to ensure higher readiness, further improvements in procurement documents and evaluation scrutiny, stringent contract management to contain high implementation and fiduciary risks, and sound safeguard management, including environmental management, such as dust control.
Likewise, he also highlighted the slow progress of some of the flagships projects, including Earthquake Emergency Assistance, Tribhuvan International Airport, Gautam Buddha Airport, SASEC Power and Road. Though Melamchi Water Supply Project is expected to deliver water to Kathmandu by October of this year, he asked the bank's officials to very closely monitor the progress and measures to accelerate as needed, to ensure target can be met for this much anticipated major accomplishment.
Addressing the programme, as the chair of the inaugural session, finance secretary Shanta Raj Subedi said that the better performance does not happen by accident. Asking the development partners to join hands with ministries in monitoring the projects, he asked ADB officials to brainstorm for two days and bring out doable solutions to expedite the projects.
Likewise, chief of International Economic Cooperation and Coordination Division of the Finance Ministry Baikuntha Aryal, listed some of the problems including project readiness, procurement problems, weak implementation capacity, lack of interagency coordination, resource constraints, social and political issues, project reports, monitoring and supervision, and also problems with development partners as factors that have hold the development projects back.

ADB, Norway to help Nepal overcome crippling power shortage

Norway has pledged a grant of 360 million Norwegian kroner ($60 million) for power sector to be spent under the Sub-Regional Economic Cooperation (SASEC) Power Expansion Project.
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.

ADB hands over Nepal's First wind-solar hybrid system to government

The Asian Development Bank (ADB) handed over its pilot project on wind solar hybrid energy system to Alternative Energy Promotion Centre (AEPC) of the Ministry of Environment here at the Nepal Resident Mission today.

The wind-solar hybrid system was installed in Dhaubadi village of Nawalparasi district in December 2011 under ADB’s regional technical assistance for Effective Development of Distributed Small Wind Power Systems in Asian Rural Areas for which the AEPC was the implementing agency in Nepal.

The $3.8 million regional technical assistance was part of ADB’s 'Energy For All' initiative that supports increasing access to energy in remote rural areas. Along with Nepal, the regional technical assistance covers Sri Lanka, Pakistan, and the Maldives.  

“The project is now providing electricity services to 46 rural households of Dhaubadi," said ADB’s country director for Nepal Kenichi Yokoyama, speaking at the handover event.

It was the pilot for the hybrid wind and solar system in Nepal, he said, adding that the success of this project has demonstrated that it is indeed viable to provide reliable energy access to rural Nepal through solar wind hybrid systems as one of the clean energy options.

He also said that the lessons learned from this project will be very useful in scaling up the systems across Nepal, as well as in other developing member countries of ADB.

The project is based on ‘energy systems’ planning approach and has installed two sets of 5 kW wind turbines complimented by 2 kWp of solar PV panels to satisfy the village’s electricity demand of 43.6 KWh per day.

The electricity from the mini-grid has helped the villagers in Dhaubadi save time and money spent on their search for firewood. Electricity has also eased a hard life by allowing women to cook and clean, children to study after dark and improved overall productivity of households.

Director of the Energy Division at South Asia Department ADB Yongping Zhai and acting executive director at the AEPC Ram Prasad Dhital signed the transfer document of the wind-solar hybrid system from ADB to AEPC starting June 13.

"ADB is now supporting the Nepal to scale up similar initiatives in other rural areas of the country under its proposed SASEC power system expansion project,” Zhai said, after signing the handover document.

"Under the proposed SASEC power system expansion project, the off-grid component with more than 4.0 MW of mini hydro and 500 kW mini grid based solar or solar and wind hybrid system will be added," he said, adding that it will provide access to electricity and facilitate productive energy use activities in rural locations from various sources of energy like mini hydro, wind energy, solar energy and wind solar hybrid energy systems.

ADB to help South Asia in intraregional trade

The Asian Development Bank (ADB) will provide $48 million to help goods move more smoothly in and out of Bangladesh, Bhutan, and Nepal, by overhauling time-consuming, costly, and often opaque customs procedures that are inhibiting intraregional trade.

"Removing the many non-tariff barriers which currently impede trade will have a major multiplier effect on trade volumes across South Asia," said Public Management specialist in ADB’s South Asia Department Emil Bolongaita. "Automated, user-friendly, transparent customs systems will cut business costs, reduce informal activity and give a real lift to importers and exporters, including women entrepreneurs."

The project will help the three countries, all members of the South Asia Subregional Economic Cooperation (SASEC) programme, adopt an international customs administration protocol, upgrade existing automated customs management systems, and establish web-based electronic trade portals. The measures will also give importers and exporters timely and accurate information.

India, which is also a SASEC member, is not included in the programme as it is funding its own trade facilitation reforms and is significantly ahead of its neighbours in the region.

Despite healthy growth, South Asia’s low levels of intraregional trade make it one of the least integrated regions in the world. Processing and export delivery times are more than 30 per cent lower than in East Asia and the Pacific, while administrative fees and storage and handling costs are more than 40 per cent costlier. Weak logistics systems, poor infrastructure and a lack of cross-border transit agreements are other impediments to trade which is nearly all land based.

Informal trading has sprung up to avoid excessive documentation and goods inspections, resulting in sizeable government revenue losses. The introduction of international customs practices, streamlined management systems including the planned establishment of 'single window' systems to simplify transactions and web-based information for traders, will make cross-border trade more efficient, cost-effective, transparent and secure.

The programme, which targets a 7.5 per cent rise in intraregional trade volumes by 2018, will complement SASEC cross-border transport projects to improve connectivity, and planned investments in projects across the transport, trade facilitation and energy sectors.

ADB, which acts as the secretariat for SASEC, has already provided $3.4 billion and has more commitments in the pipeline.

The sub-regional group, SASEC, was set up in 2001 as an initiative of Bangladesh, Bhutan, India, and Nepal. It aims to promote domestic and regional prosperity through stronger transport links and increased trade and cooperation across sectors ranging from energy, tourism, private sector and environment.

ADB to support two projects

Asian Development Bank (ADB) has pledged to provide loan to the South Asian governments to complete two ambitious projects.
The ADB has agreed to provide loan to construct the second cross-border transmission line and mega hydro project during recently held meeting of fourth South Asia Sub-regional Economic Cooperation (SASEC), said joint secretary at the Finance Ministry Baikuntha Aryal.
The bank is ready to provide assistance to construct second cross-border transmission line since there is only one transmission line in the country at present, he said, adding that alternative transmission line will help electricity trade between Nepal and other South Asian countries.
The government has to finalise appropriate route to construct cross-border transmission line, he said, adding that Butwal-Gorakhpur route and any other alternative line from far west to India are under consideration.
Similarly, the bank has informally agreed to provide up to $1 billion to construct mega hydro project. However, the government has to hold intensive talks with Bangladesh before initiating mega project.
“The mega project will be targeted to supply electricity in SASEC countries,' he added.
The meeting also raised some crucial issues of regional trade including regional road connectivity and transit and customs facilitation.
Nepal raised the issue of upgradation of the Kakarvitta (Nepal)-Panitanki-Phulbari (India-Banglabandh (Bangladesh) route and construction of dry port at Panitanki of India, the ministry said.
The Kakarvitta-Banglabandh route provides the shortest access of only 44-km to Banglabandh border from Nepal. However, the meeting could not yield any concrete conclusion and visible decision on regional trade issue.
The overall agendas of the meeting were about enhancing connectivity among SACEC countries and upgrading customs points to promote trade among member countries.
SASEC was launched in 2001 with ADB assistance to support and facilitate regional cooperation. Nepal, India, Bangladesh and Bhutan are member countries of SASEC.