News Column

ADB extends helping hands to tackle chronic power shortage

July 16, 2014

Sharachchandra Bhandary

In order to help Nepal overcome its crippling power shortages and export surplus electricity to neighboring India, the Asian D e v e l o p m e n t Bank (ADB), on Monday has approved 180 million US dollars loan for the up gradation and expansion of transmission and distribution lines and substations.

Though the hydropower business is booming in Nepal, mainly due to massive untapped resources and huge power shortages, Nepalis are compelled to live in darkness. In a bid to overcome such situation and assist Nepal in her economic growth, the multilateral agency has consistently been supporting.

The loan will help Nepal Electricity Authority (NEA) finance a substantial upgrade and expansion of transmission and distribution lines and substations, allowing the transfer of up to 2,000 megawatts (MW) of power to main load centers in the Kathmandu Valley. As well as meeting domestic needs, this network expansion will give Nepal the ability to export at least 1,200 MW of electricity to India, once a second 400 kilovolt cross-border transmission line from Bardaghat to Gorakhpur in India is complete. With six new hydropower plants due to come on stream over the next 3 to 6 years, the country expects to have a substantial wet season supply surplus for export by 2018.

The project will also help Alternative Energy Promotion Centre (AEPC) provide electricity to the hard-to-reach rural communities, with minigrid renewable energy systems, including mini hydroelectric, solar and wind generation, through provision of an ADB credit line and the AD administered Strategic Climate Fund. Through an associated capacity development technical assistance, the project will support AEPC to develop a feasibility study for a large-scale wind farm.

Since 2009, ADB has helped Nepal reform and overhaul its power sector and the new assistance will aid the government’s target of providing grid power to 75% of the population, with off grid energy for the remaining 25percent, by 2027. The project is also a priority initiative of the broader South Asia Sub regional Economic Cooperation Program, which aims to expand power and other cross-border exchanges and connections around the region. The loan, from ADB’s concessional resources, will be complemented by a co financing loan of 120 million dollars from the European Investment Bank, a 60 million grant from the Government of Norway, and an 11.2 million dollars grant from the AD administered Strategic Climate Fund. The projects are expected to be completed by the end of 2021.

“Right now, limited generating capacity and weak power transmission and distribution networks mean two thirds of households in Nepal have no electricity and many of those who are suffer power cuts for up to 12 hours a day during the dry season,” said Lei Zhang, Energy Specialist with ADB’s South Asia Department. “There’s a pressing need to provide more energy to domestic customers and harness more clean energy for sale overseas when the country has surpluses.” According to Department of Electricity Development, so far it has issued survey license to 674 projects totalling 20,756 MW in capacity. Whereas, 59 projects of 1357 MW capacity have obtained construction license. With the limited transmission capacity and lack of India-Nepal inter country grid connection; will all these projects get built? Energy sector experts doubt. Similarly, NEA is marred by corruption and it is almost on the verge of collapse. Structural reform is the only way out to save this white elephant. The policy makers and top bureaucrats need to look seriously into this matter before it is too late.

Nepal has tremendous potential for hydro-electric power generation. Nepal’s steep topography and its perennial rivers provide an ideal condition for developing large-scale hydro-electric power plants. Out of total feasible hydropower potential of 42,000 MW, less than 2% of feasible power has been produced so far. In 2010, Nepal’s integrated power system has a total installed capacity of about 700 MW of which hydro-electric power’s contribution is 650 MW. The rest of the power comes from thermal plants, multi-fuel plants, and purchase from India.

A recent media report reveals that a 220 KV transmission line that stretches 75 km from Sahare of Dolakha to Dhalkebar on the East-West High was started a decade ago. But the power lines that will feed electricity from several new hydropower projects in the Tama Koshi Valley to the national grid have been stuck for over two years. Likewise, NEA’s 132 KV Thankot-Chapagaun Bhaktpur transmission line has been stuck for nine years. Against this back drop, the implementation and completion of ADB assisted this project on time seems unrealistic.

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Source: People's Review (Nepal)

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