WB approves $20m for power sector reform

Kathmandu, September 27

The World Bank Group (WBG), today, approved a credit of $20 million for Nepal to implement the ‘Power Sector Reform and Sustainable Hydropower Development Project’.  The project will help strengthen the capacity of power sector agencies in Nepal to plan and prepare hydropower generation and transmission line projects along international standards and best practices and improve the readiness of power sector agencies to undertake regulatory and institutional reforms.

The first project component will support the preparation of the Upper Arun Hydroelectric Project and the Ikhuwa Khola Hydroelectric Project, identified as priority public investments by the government.

The project will also support the preparation of transmission line projects to be identified by the ongoing ‘Transmission System Master Planning’.  A second component will finance studies and propose policy recommendations critical for power sector reforms.

It will also promote river basin planning in an integrated water resource management approach for selected river basins and recommend improvements in water resource management and regulations, according to the WBG.

The third component will support capacity building for safeguards management and sustainable hydropower development.

“Reforms initiated under this project will underpin the agenda of transformational hydropower development that the World Bank Group intends to support in Nepal over the coming years,” the statement issued by WBG quoted its Practice Manager for Energy and Extractives Julia Bucknall as saying and added, “This project will help identify and address key challenges that stand in the way of Nepal achieving its full potential in the power sector.”

The statement has also said that the project will be implemented with the involvement of a wide range of power sector agencies in Nepal including the Ministry of Energy, the Ministry of Finance, the Ministry of Environment, the Investment Board of Nepal, the Department of Electricity Development, the Department of Irrigation, the Department of Water Supply, the Water and Energy Commission Secretariat, the Electricity Tariff Fixation Committee, Nepal Electricity Authority, Alternative Energy Promotion Centre, as well as academic institutions, civil society organisations and development partners including ADB, USAID, JICA, KfW and Norwegian government.

The statement also read that in addition to concessional credit financing from the International Development

Association (IDA), the project will also receive a $2.5 million grant from the South Asia Water Initiative (SAWI), a multi-donor trust fund administered by the World Bank.