NEA Urged AIIB To Increase Investment In Electricity Infrastructure Expansion

NEA Urged AIIB To Increase Investment In Electricity Infrastructure Expansion

March 26, 2024, 6:57 p.m.

The Nepal Electricity Authority (NEA) has urged the Asian Infrastructure Investment Bank (AIIB) to enhance its investments in projects aimed at improving and expanding electricity infrastructure.

During a meeting with a delegation of AIIB board members led by R. M. P. Rathnayake, NEA's Managing Director Kulman Ghising emphasized the importance of increasing investments in enhancing the infrastructure for electricity transmission and distribution at favorable interest rates.

MD Ghising also provided an overview of Nepal's energy sector and highlighted the significant investment required to develop production, transmission, and distribution facilities to ensure a reliable, high-quality, and safe electricity supply.

He emphasized the need for substantial investments to facilitate electricity trade with neighboring countries and mentioned that approximately 60 billion US dollars (including contributions from the private sector) are needed to implement the energy sector roadmap proposed by the Ministry of Energy until 2035.

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MD Ghising stressed the importance of securing concessional loans at low interest rates from multilateral agencies like AIIB to support projects in power generation, transmission, and distribution.

MD Ghising briefed the AIIB delegation on the ongoing efforts to ensure a reliable and high-quality electricity supply, energy transition and efficiency, increased electricity exports, construction of reservoir projects, as well as the expansion and enhancement of distribution and transmission operations to address seasonal electricity production imbalances. The delegation expressed the bank's willingness to invest in the energy sector and inquired about the progress of ongoing projects funded by AIIB, environmental and social protection measures, energy sector restructuring, and market guarantees for electricity exports.

Representing Nepal, Krishna Nepal, a member of the AIIB Board of Directors and Joint Secretary, Head of the International Financial Aid Coordination Division at the Ministry of Finance, emphasized the importance of providing subsidized loans at low interest rates from banks to support the development of the energy sector.

Nepal has received a concessional loan of 112.3 million dollars from AIIB for the purpose of enhancing and expanding its electricity distribution system.

This loan will be utilized to improve the electrification and distribution system in various regions, including Dang, Banke Bardia, Rolpa, Lumbini Province, and 8 districts of Karnali Province. The project aims to construct 19 distribution substations, 350 km of 33 kV lines, 1798 km of 11 KV lines, 3159 km of LT lines, and install 1045 distribution transformers. The contract agreement and project design have already been finalized for the smooth implementation of this project.

Additionally, AIIB, led by Korean companies, has also provided a loan of 40 million dollars for the ongoing construction of the 216 MW Upper Trishuli-1 hydropower project in Rasuwa through foreign direct investment.

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