ADB, Nepal Ink Deals for Power Transmission and Battery Storage Expansion

The Asian Development Bank (ADB) and the Nepal government have signed two significant agreements to expand Nepal’s electricity transmission and battery energy storage systems (BESS) through a public-private partnership (PPP) model. This marks the first time ADB has provided ‘Transaction Advisory Services’ (TAS) to attract private sector investment in Nepal. The agreements were signed by ADB’s Country Director for Nepal, Ardo Kauws, and representatives from the Nepal government. While the specific names and full titles of the Nepali signatories were not fully detailed in the source material, the deals aim to leverage private sector capital and expertise to bolster the nation’s energy infrastructure. Energy Security and Infrastructure Goals. The initiative is crucial for Nepal’s energy security, as highlighted by Hitenra Dev Shakya, Managing Director of the Nepal Electricity Authority (NEA). Shakya emphasized the necessity of battery and pump storage projects, citing the crisis Nepal faced in 2021 when electricity imports from India were abruptly halted. This event underscored the vulnerability of relying heavily on a single energy source and the critical need for robust domestic storage solutions. Nepal has set an ambitious target of generating 28,500 megawatts of electricity by 2035. This goal includes the integrated development of hydropower and solar energy, alongside building climate-resilient infrastructure. The government also plans to restructure the Nepal Electricity Authority (NEA) into three separate entities responsible for generation, transmission, and distribution/trade, aiming to improve efficiency and attract investment. Background and PPP Model. The concept of public-private partnerships (PPP) in Nepal’s energy sector is not new. The Electricity Act 2049 and Electricity Regulations 2050 have historically facilitated private sector involvement. The Chilime Hydropower Project is often cited as an early example of a government-private partnership in the country. ADB has previously committed significant support to Nepal’s development. During a visit to Nepal, the ADB President reiterated a commitment to provide $2.4 billion in aid by 2029. Furthermore, a long-term power trade agreement has been signed between Nepal and India, with a goal to export 10,000 megawatts of electricity from Nepal over the next decade. Looking Ahead. While the agreements signal a positive step towards enhancing Nepal’s energy infrastructure, several key details remain to be clarified. The exact date of the agreement signing, the full identification of the Nepali government signatories, the specific projects targeted under these advisory services, and the implementation timelines are yet to be publicly disclosed.