Nepal will need an investment of US $ 4.5 billion to construct big hydropower projects in next 8 yrs: NEA

Kathmandu: Nepal will need an estimated US $ 4.5 billion to build big hydropower projects, which are in the final stages of construction, in the next eight years.

Managing Director of the Nepal Electricity Authority (NEA) Kulman Ghising on Tuesday said the aforementioned amount has been projected for the NEA’s pipeline projects. Presenting a paper at a workshop entitled ‘Financing Energy Sector in Nepal’; Ghising said the authority has been looking forward to managing investment for the hydropower projects that have completed the feasibility study. The program was organized by the USAID-Funded Urja Nepal Project.

According to the NEA, 1,061 MW Upper Arun, 635 MW Dudhkoshi, 490 MW Arun-4. 100 MW Tamakoshi-5, 210 MW Chainpur Seti and 60 MW Modi Hydropower Project, among others, are ready to go into construction. Ghising said the NEA has planned to finance small projects from its own source, while the foreign loans will have to be managed for big projects.

Out of the foreign assistance, each of the World Bank and the Asian Development Bank will be investing USD 550 million while EXIM Bank and Japan International Cooperation Agency (JICA) Nepal have also expressed interest to invest in the proposed projects.

Likewise, an additional USD 4.5 billion has been sought for the installation of transmission lines and substations. The transmission lines are considered vital to construct a high capacity distribution network that will ensure quality enhancement for distribution and extension of electrification, according to the NEA.

Ghising said they have been working to develop distribution network that will help meet demand for electricity for the next seven years. This will include five cross-border transmission lines, which can transfer more than 12,000 MW of electricity for energy trade. A total of USD 1.5 billion has been estimated to construct infrastructure related to distribution.

Satish Joshi, an energy specialist at Urja Nepal Project, said Nepal will need more than Rs 67 billion on an annual average for infrastructure related to construction of hydroelectricity projects by 2035. According to him, an additional Rs 38 billion will be needed annually to install transmission lines, while a total of Rs 270 billion will be needed for substations.

The NEA has estimated that it will face a deficit of Rs 1.369 trillion to finance the planned projects. The state-owned public utility has sought to manage the amount by issuing initial public offerings and green bonds for production, while implementing the joint venture model and boot model in the transmission sector.