Nepal energy crisis funding includes hydropower

The World Bank has approved US$89.2 million to support Nepal’s Energy Crisis Management Action Plan, including rehabilitation of a Nepal hydro project and expansion of small hydropower plants.

The bank said the financing, approved June 18, 2009, is a blend of a US$73.7 million credit and a US$15.5 million grant from the bank’s International Development Association. The credit has 40 years to maturity with a 10-year grace period.

The funding, which is additional financing for the existing Nepal Power Development Project, will include investments in rehabilitation of the 144-MW Kali Gandaki A hydroelectric project on the Kali Gandaki River in western Nepal. Nepal Electricity Authority recruited consultants in June to assist procurement for the project’s rehabilitation. (HydroWorld 5/29/09)

Funds also will go to expand the government’s off-grid micro-hydro rural electrification program, adding 4.25 MW to serve an additional 36,000 households. The bank said funds also will go to rehabilitation of two thermal plants, construction of the Bharatpur-Bardaghat transmission line, and strengthening of the distribution network in Kathmandu Valley.

“While some cite the high costs of hydropower development as an argument against developing Nepal’s great potential in this area, the cost to the economy of doing without electricity or relying on the alternatives is enormous,” World Bank Senior Energy Specialist Michael Haney said.

The bank said Nepal is experiencing an energy crisis caused by years of under-investment and sharp growth in electricity demand, exacerbated by drought and the loss, through flooding, of a transmission line that had imported electricity from India. Load shedding has increased with grid-based consumers being supplied electricity only eight house per day.

The government’s immediate priorities are to identify and implement quick investments to prevent winter crises, implement medium- to long-term development plans, and ensure continued expansion of its micro-hydropower rural electrification program.

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