Nepal Bags USD 100 Mn World Bank Grant for Energy Sector

Offering due attention to the country’s energy potential, the World Bank approved its first-ever loan-based support worth USD 100 million to Nepal energy sector.

The grant under the Nepal Energy Sector Development Policy Credit program intends to support the country’s energy sector in effective implementation of related regulatory, policies and institutional measures. 

The fund is going to play a key role in strengthening financial viability of the Nepal Electricity Authority (NEA) through the establishment of a regulatory framework that eases electricity trade and restructures NEA encouraging the private sector participation.

“The proposed credit aims to support the restructuring and market reform of the electricity sector to improve governance and performance of electricity institutions, eventually enhancing quality and efficiency in services,” World Bank Country Manager for Nepal Faris Hadad-Zervos said in a statement.

The World Bank’s move gains significance in view of the fact that Nepal is heavily dependent on electricity imports despite its high hydropower potential, to address the power shortage domestically.

This situation persists owing to the large number of yet-to-be-materialized hydropower projects in the country.

“The new credit aims to implement policy and institutional measures to overcome these challenges and help bring about structural reforms in the energy sector, to ensure affordable electricity services and encourage predictability for sustainable investment,” the World Bank release informed.

The World Bank is currently supporting 22 active investment projects in Nepal with USD 2.5 billion assured in commitment from the International Development Association.

With the first credit assistance in 1969 for a telecom project, the World Bank has so far offered
USD 4.75 billion in assistance to Nepal, with USD 3.48 billion in credits and USD 1.27 billion in grants.