The World Bank has approved a credit of US$ 20 million for the Government of Nepal to implement the Power Sector Reform and Sustainable Hydropower Development project. Nepal will receive the concessional credit financing through the International Development Association (IDA).

The Power Sector Reform and Sustainable Hydropower Development project will help strengthen the capacity of power sector agencies in Nepal to plan and prepare hydropower generation and transmission line projects along international standards.  It will also help improve the readiness of power sector agencies to undertake regulatory and institutional reforms.

According to the press release by the World Bank, the first project component will support the preparation of the Upper Arun Hydroelectric Project and the Ikhuwa Khola Hydroelectric Project, identified as priority public investments by the Government of Nepal.  It will also support the preparation of transmission line projects to be identified by the ongoing Transmission System Master Planning.

A second component will finance studies and propose policy recommendations critical for power sector reforms.  It will also promote river basin planning in an integrated water resource management approach for selected river basins and recommend improvements in water resource management and regulations.

The third component will support capacity building for safeguard management and sustainable hydropower development.

“Reforms initiated under this project will underpin the agenda of transformational hydropower development that the World Bank Group intends to support in Nepal over the coming years,” said Julia Bucknall, Practice Manager for Energy and Extractives at the World Bank. “This project will help identify and address key challenges that stand in the way of Nepal achieving its full potential in the power sector,” she said.

Apart from the concessional financing from IDA, Nepal will receive a $2.5 million grant from the South Asia Water Initiative (SAWI), a Multi Donor Trust Fund administered by the World Bank.