ADB signs $60 million private sector deal to build hydropower plant in Nepal

The Asian Development Bank (ADB) has signed a 60 million dollar financing package with Nepal Water and Energy Development Company (NWEDC) to help build and operate a 216-megawatt run-of-the-river hydropower plant on the Trishuli River near the capital Kathmandu.

The project is one of the largest private sector investments in Nepal to date. It will enhance the country's energy security by helping to utilise its renewable hydro resources and reduce imports of electricity.

Once operational, the plant is expected to provide over 1,200 gigawatt-hours of clean electricity annually to the national grid. The project is aligned with ADB's operational priorities outlined in Strategy 2030, notably to eradicate remaining poverty, reduce inequalities, tackle climate change, build climate and disaster resilience, and enhance environmental sustainability.

The agreement for the Upper Trishuli-1 Hydropower Project was signed by Shantanu Chakraborty, Director of Infrastructure Finance, South Asia, Central Asia and West Asia at ADB's Private Sector Operations Department and NWEDC's Chief Executive Officer Yi Bo Seuk.

The financing comprises a loan from ADB and a loan from the ADB-administered Canadian Climate Fund for the Private Sector in Asia II (CFPS II). CFPS II was established by the Canadian government to encourage private investment in climate change mitigation and adaptation projects in Asia and the Pacific.

CFPS II funding was integral to the project's financial viability as it helped attract private capital currently unavailable in the market.

"This is a landmark transaction that will provide strong incentives for further private sector investment in Nepal's energy sector," said Chakraborty.

"To ensure it provides sustainable benefits, this project will adopt international best practices in safeguards management and will also introduce measures to promote gender equality including job opportunities for women and better access to education, health care, amenities and infrastructure," he said.

The project has been prepared in compliance with international environmental and social standards. Detailed studies by international experts have assessed alternatives, impacts, and proposed mitigation measures representing global best practice in hydropower development.

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