Kathmandu, Mar. 27: The Nepal Electricity Authority has requested the Asian Infrastructure Investment Bank (AIIB) to increase investment in electricity infrastructure improvement and expansion projects. In a meeting on Monday with the delegation, including the members of the AIIB Board of Directors who were visiting Nepal under the leadership of R.M.P. Rathnayake, Managing Director of NEA Kul Man Ghising requested to increase the investment in improving and expanding the infrastructure for electricity transmission and distribution at cheap interest rates.

Briefing the delegation about the outline of Nepal’s energy sector and investment needs, Ghising said that a large investment was needed to increase production, build transmission and distribution structures for adequate, reliable, qualitative and safe electricity supply, and to expand electricity trade with neighbouring countries.

“For the implementation of the energy sector roadmap up to 2035 advanced by the Ministry of Energy, Water Resources and Irrigation, nearly USD 60 billion (including private sector) investment is required for power generation, transmission and distribution projects. For this, concessional loans at low interest rates from multilateral agencies like AIIB are needed,” he said.

The delegation said that the bank was willing to make necessary investments in the energy sector in Nepal. The delegation showed its concern about the progress of projects currently under construction with AIIB’s investment, environmental and social protection issues, restructuring of the energy sector, and market assurance for electricity exports, according to the NEA.

On behalf of Nepal, Shree Krishna Nepal, a member of the AIIB Board of Directors and Joint Secretary of the Ministry of Finance, stressed on the need to provide subsidised loans at low interest rates from banks for the development of the energy sector. Currently, the AIIB has provided a concessional loan of USD 112.3 million to Nepal for the implementation of electricity distribution system improvement and expansion projects.

The subsidised loan obtained through the project is being spent on the expansion and improvement of the electrification and distribution system of Dang, Banke, Bardiya and Rolpa of Lumbini Province and eight districts of Karnali Province.

From the project, 19 distribution substations of 33-11 kV, 350 km of 33 kV transmission line, 1798 km of 11 kV transmission line, and 3,159 km of LT line will be constructed and 1,045 distribution transformers will be installed, said the NEA. The contract agreement and project design have been completed for the implementation of the project.

The AIIB, under the leadership of Korean companies, has provided a loan of USD 40 million to the 216-megawatt Upper Trishuli-1 hydropower project under construction in Rasuwa through foreign direct investment.

In the meantime, the AIIB delegation also met Prime Minister Puishpa Kamal Dahal ‘Prachanda’ and Finance Minister Barsaman Pun on Monday.  Similarly, the AIIB delegation held discussions with the representatives of the Federation of Nepalese Chambers of Commerce and Industry on Tuesday.

During the meeting, President of Federation of Nepalese Chambers of Commerce and Industry Chandra Dhakal requested the AIIB to invest more in Nepal.  Stating that Nepal is a country with immense potential for growth and development, he informed the AIIB that the private sector was eager to leverage this potential through strategic partnerships with organisations like AIIB. 

Dhakal said that Nepal was strategically located between two economic giants, India and China, which means Nepal can provide easy market access to goods produced in Nepal to two of the world’s biggest markets.  He highlighted that there are investment opportunities in infrastructure, energy, tourism and agriculture in Nepal. “AIIB has already been a key partner in several important projects in Nepal, and we are eager to explore new avenues for collaboration,” he said.