ADB Contributes $150m Loan For Nepalese Hydropower Project

The Asian Development Bank (ADB) is lending $150 million to the Nepal government for development of a $500-million hydropower plant with a 140MW capacity. The hydropower plant, to be located around 150 kilometers west of Kathmandu on the Seti River in Tanahu district, will generate electricity round the year, says an ADB representative in a statement.

“To ensure steady supply even during the dry winter months of November through April, the plant will be fed from a 7.26 sq km reservoir, making it Nepal’s first major hydropower plant with water storage capacity and a sediment flushing system,” the statement further says.

Around 85% of Nepal’s existing plants use the run of the river technology to generate power, which makes for lower output during the dry season.

“In addition to building the plant and a transmission system, the project will also provide at least 17,636 homes in the area of the hydropower plant with direct connections to the national power grid,” says the statement. Currently, only around one-third of Nepali households are connected to the electricity distribution grid, with connection rates much lower in rural areas. The entire project will be co-funded by the ADB and the Japan International Cooperation Agency, the European Investment Bank, and the Abu Dhabi Fund for Development.

“Nepal has an energy crisis, and this is affecting badly economic prospects,” an ADB statement quotes Yongping Zhai, director, Energy Division in ADB’s South Asia Department, as saying. “This energy project is a means to stop this crisis.” Electricity demand is growing at 10 percent a year in the country, but lack of investment means supplies are not keeping up, says the statement.

“Blackouts of up to 18 hours a day in the dry season are common, even in the capital, Kathmandu. This forces businesses and households to use expensive and polluting diesel generators.”

Nepal’s mountain ranges and many swiftly flowing rivers endow it with huge hydropower resources. However, the country’s total installed power generation capacity is just 700 MW – largely from hydropower. This represents only 1.5% of Nepal’s hydropower potential.

“The hydropower plant’s construction will follow best international practice. ADB will ensure that the appropriate social and environmental rules, procedures and guidelines are adhered to,” says the statement.