AIIB’s New Loan to Develop Nepal’s Power Infra, More in the Offing

In a move enhancing Nepal’s power infrastructure, the Asian Infrastructure Investment Bank (AIB) granted a USD 1 million support to develop the country’s electricity distribution and transmission system.

The Finance Ministry officials and AIIB representatives signed an agreement in this regard on June 26, 2018, on the sidelines of the third AIIB annual meeting currently being held in Mumbai. 

The state-owned Nepal Electricity Authority (NEA) will take up this project that will be carried out under the Power Distribution System Upgrade and Expansion Project.

According to AIIB, the project envisages to enhance power access and address gaps in power distribution in the western and far western regions of Nepal besides enhancing the quality of key infrastructure services across the municipalities (involved in the project) in the Tarai region.

“The project preparation grant will also help prioritize investment areas, prepare context-sensitive engineering design appropriate for geographical and demographic characteristics of each district, and ensure readiness of the project for implementation,” AIIB said in a statement.

The government is seeking a USD 76 million loan from AIIB for the project complete execution.

Shree Krishna Nepal, Chief of the International Economic Cooperation Coordination Division of the Finance Ministry, and an AIIB representative were present at the signing ceremony.

Other Projects in the Offing

The latest approval is the second such grant Nepal is receiving from AIIB after the USD 1 million aid for the Urban Infrastructure Investment Project received in November 2017.

Nepal Government is also awaiting AIIB approval for its three other project proposals submitted recently, which include: Sharada-Babai Hydropower Project planned on the Babai and Sharada rivers, Pokhara-Beni Jomsom Road Upgrading project and Samakhusi-Tokha-Chhahare Road Upgrading and Extension Project.

The aid is part of AIIB’s project preparation special fund created to support its member countries in their project endeavors.

“The purpose of this grant is to enhance the quality of project preparation through financing preparatory activities, such as feasibility study, environment and social assessment and procurement support,” says AIIB.