Nepal to Negotiate AIIB Financing for Power Distribution

Nepali Government has decided to start negotiation with Asian Infrastructure Investment Bank (AIIB) on receiving loan worth 112.3 million U.S. dollar for the construction of electricity distribution lines.

During a regular press briefing, Nepali Government’s Spokesperson and Minister for Communication & Information Technology Gokul Baskota said that a recent cabinet meeting decided to form a negotiation team headed by Nepal’s Finance Ministry Joint Secretary.

The project ‘Power Distribution System Upgrade and Expansion Project’ aims to increase access to and improve quality and efficiency of electricity supply in selected areas of Western Nepal.

If approved by the bank’s board, it will be the second project where China initiated bank will be financing in Nepal

In June, the AIIB had announced providing loan up to 90 million U.S. dollar for 216 MW Upper Trishuli-1 Hydropower Project to be developed on Trishuli river in central Nepal, as its first financing to Nepal. Nepal is one of the founding members of the AIIB.

The estimated cost of this power distribution project is 135 million U.S. dollar, according to the project proposal. Nepali government will contribute 17 million U.S. dollar and Nepal Electricity Authority (NEA), state-owned power utility body, which is implementing this project, will contribute 6.5 million.

The NEA which is the sole power utility body of Nepal has been struggling to ensure uninterrupted power supply due to poor distribution infrastructure despite officially ending the load shedding across the country since last year.

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