23 June, 2011

The World Bank has approved a USD 99 million (Rs. 440 crores) package for an Indo-Nepal cross-border energy cooperation to mitigate a national energy crisis in the Himalayan republic. The funding is meant for the landmark Nepal-India ElectricityTransmission and Trade Project (NIETTP) that will provide Nepal with at least 100 MW of additional electricity, to supplement its current electricity generation capacity of 698 MW and help minimise power blackouts.The project will see the establishment of cross-border transmission capacity of about 1,000 MW. It will also develop key segments of the backbone high voltage system to help expand access to electricity across Nepal.”Increasing access to electricity is one of the most significant development challenges facing Nepal today,” said Susan Goldmark, World Bank Country Director for Nepal. “For the first time this project will help mitigate deficits through the trade in electricity. Once Nepal develops its hydropower potential and meets its domestic needs, the transmission infrastructure could also be used to export surplus hydropower and earn revenues for Nepal.”In response to the worsening electricity situation, the government of Nepal declared a “national energy crisis” in December 2008 and approved an Electricity Crisis Management Action Plan which is currently under implementation, with support from the World Bank.The Action Plan includes development of the Dhalkebar-Muzaffarpur transmission link, a key component of the NIETTP and the first major cross-border transmission line between India and Nepal. Upon completion, Nepal could end electricity rationing by 2015, according to projections.The Bank’s assistance package for NIETTP comprises a credit of $84 million and a grant of $15 million. The IDA credit carries a 0.75 percent service charge, 10-year grace period and a maturity of 40 years.