The Government of Norway and the Asian Development Bank (ADB) signed on the 14. November a co-financing agreement to fund the South Asia Sub-regional Economic Cooperation (SASEC) Power Expansion Project. The project seek to increase electricity access and help overcome power shortage in Nepal. The project will support the building of much needed transmission infrastructure and encourage further investment in the hydropower sector. The new transmission infrastructure will serve what could be the second cross border transmission line between Indian and Nepal.
Norway contributes with a grant of NOK 360 million, approximately USD 55 million. This will be the second transmission line Norway is helping finance in Nepal.
– This is by far the largest single project support by Norwegian Government to the Energy Sector of Nepal. We believe that the project will leverage private sector investment and extend access to energy services in Nepal. This is in line with the Norwegian development policy on Energy, says Norwegian Ambassador to Nepal, H.E. Kjell Tormod Pettersen.
– 60 million kroner out of the 360 million kroner contribution is earmarked for results-based payment, based on delivery of mutually agreed results. Result-based payment is an essential Energy+ principle, the ambassador adds.
The grant from Norway will complement a $180 million loan from ADB’s concessional resources, a loan of $120 million from the European Investment Bank and a $11.2 million grant from the ADB administered Strategic Climate Fund.
– With several new hydropower projects coming on board in the next few years, this project is crucial in developing a robust and reliable transmission network allowing transfer of power to main load centers for domestic needs as well as give Nepal the ability to export electricity to India, says Joint Secretary at the Ministry of Finance Mr. Madhu Kumar Marasini.
Only 65% of Nepal’s households have access to electricity, and per capita electricity consumption is only 102 kilowatt hours (kWh) per year. This is one of the lowest in the world. Grid-connected consumers experience scheduled power cuts of 10-12 hours per day during dry seasons.
– Access to electricity is vital for Nepal’s all round development. This project will help Nepal Electricity Authority to substantially upgrade and expand transmission and distribution lines and substations. The project will also help the Alternative Energy Promotion Centre (AEPC) to provide electricity to rural communities with mini grid renewable energy systems, says ADB’s country Director for Nepal Mr. Yokoyama.
There is 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. ADB and Norway will put in place a special provision so that marginalized households in the distribution corridor (the Marsyngdi, Kali Gandaki and Trishuli Corrridors) will be connected.
Norway, along with a number of other bilateral and multilateral development partners, is supporting the National Rural Renewable Energy Program (NRREP). More than USD 15 million will be used to further increase access to energy services to communities beyond the reach of the electricity grid distribution network through the NRREP.
The project has been developed with active coordination among the NEA under the Ministry of Energy (MOE), AEPC under the Ministry of Science, Technology and Environment (MOSTE), the Government of Norway, ADB, the European Investment Bank (EIB).