The power transmission systems of Nepal will be able to draw on the second loan granted to improve them in two weeks. Credit: Giuseppe Mondi on Unsplash.

The Asian Development Bank (ADB) has agreed to give a $200m concessional loan to help upgrade power supply and transmission systems in Nepal.

This agreement follows a similar loan agreement last week, where the World Bank offered credit of $100m.

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The Government of Nepal will use the money from ADB to upgrade the transmission system in Kathmandu Valley, Bharatpur metropolitan area in Bagmati Province and Pokhara of Kaski district in Gandaki Province. Additionally, it will address its frequent and prolonged power supply interruptions.

ADB principal energy specialist Jiwan Acharya said: “The project will help sustain Nepal’s improved electricity supply momentum over the past two years.

“This 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 labour during the construction phase as the country adopts measures to mitigate the socio-economic impact of the coronavirus disease (Covid-19) pandemic.”

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Additionally, the Government of Norway has agreed to offer a co-financing grant of $35m. This will allow installation and upgrading of distribution networks in Province 2, where 20% of households are not connected to the grid. The money will also help build other substations to evaluate hydropower in the country.

A technical assistance grant worth another $5m will enhance the Nepal Electricity Authority’s capacity to incorporate new technologies to make its infrastructure resilient, while improving gender equality and social inclusion.