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European loan for Nepalese hydropower

The European Investment Bank (EIB) has loaned the Federal Democratic Republic of Nepal €55 million to build a hydropower plant in the Tanahu District.

The loan, worth approximately 6.41 billion Nepalese rupees, will be used to design and operate the 140 MWe planr on the Upper Seti River in the central part of Nepal.

The finance contract was signed today in Kathmandu by EIB vice president Magdalena Álvarez Arza and Nepalese finance secretary, Shanta Raj Subedi, one year after a Framework Agreement was signed.
“[The EIB] is delighted to see that its first loan to Nepal will eventually provide clean power to the country allowing households to enjoy electrical light, children to read after dark, hospitals and schools to function and entrepreneurs to invest and create jobs,” said Álvarez Arza, who is responsible for the EIB’s operations in Asia. “This loan shows our firm commitment to contribute to a stronger and sustainable dynamism of the Nepalese economy.”
Dr Alexander Spachis, ambassador and head of the European Union Delegation to Nepal, said that the involvement of EIB in Nepal's economic development will yield positive results in the long run, allowing citizens to experience a significant improvement in their living standards. "Since energy is the key to speeding up social and economic development, the present EIB loan will contribute to help Nepal achieve its development goals in the next couple of years," he said.
The plant will help meet peak electricity demand in Nepal during the dry winter season when shortages are more acute and will operate as a base load power plant during the remaining period of the year. It will also contribute to reduce the adverse impacts of climate change by replacing more polluting energy sources.
The project includes a programme of rural electrification to supply power to 17 villages in the vicinity of the plant. A Community Development programme will be implemented for people living in the area, addressing education, health, gender development, social inclusion, economic development and livelihood activities.
The project is also financed by the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA) and the Abu Dhabi Fund for Development, with the EIB funding representing 15% of the total cost of the project. This EIB loan comes under the current lending mandate for Asia and Latin America (ALA IV) and meets EU’s objectives and the general Bank’s mandate for ALA of supporting social and economic infrastructure and climate action.

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Energy efficiency  •  Other marine energy and hydropower  •  Policy, investment and markets