Nepal in priority for investment: AIIB; NEA urges to increase investment in power infrastructure

Kathmandu / March 26: The Asian Infrastructure Investment Bank (AIIB) has said it accords top priority to Nepal. A visiting high-level delegation from the AIIB said this during a meeting with Finance Minister Barshaman Pun, according to the Minister’s Secretariat.

On the occasion, Finance Minister Pun urged the AIIB to scale up its investment in Nepal’s infrastructure development and other projects. In reply, AIIB Director RMP Rathnayake, who leads the delegation, praised Nepal’s endeavours for investment policy reforms and for their enhancement. He pledged to adopt a policy of increasing investment in Nepal in the days to come on the basis of the availability of resources.

The Minister also urged the AIIB for a partnership with Nepal’s private sector as per its policy of mobilizing its 50 per cent capital in partnership with the private sector. In response, the delegation chief suggested the possibility of collaboration with Nepal’s private sector by selecting multi-year projects.

On the occasion, the Finance Minister invited the AIIB to the Third National Investment Summit that Nepal is scheduled to host on April 28-29. Director Rathnayake said a high-level participation will be there from the AIIB at the Summit.

The Minister utilised the forum to call on the AIIB to ensure provisions to provide a concessional loan to Nepal and middle-income developing countries. He shared with the delegation that Nepal has been deprived of leveraging on expected benefits from the AIIB due to its relatively high-interest rates. “Despite being the AIIB founding member, Nepal has failed to take expected benefits from its investments due to a high-interest rate,” he said.

Stating that multiple projects of infrastructure development are to be carried out in Nepal, he insisted on the concessions on AIIB borrowings to Nepal. As he said, the government accords top priority to the infrastructure development and it is required to source out the funds due to its limited internal resources.

The Minister advised the AIIB to invest in Nepal’s infrastructure development, hydroelectricity, tourism and information technology sectors, and the areas of relative benefits.

He apprised the delegation that an agreement has been reached to supply 10,000 megawatts of electricity and added that there is no market issue for power to be generated in Nepal. Likewise, as per the power trade agreement between Nepal and Bangladesh, Nepal will be soon exporting 40 megawatts of electricity to Bangladesh.

Sharing about Nepal’s process to graduate from the least developed country to a developing country by 2026, the Minister sought diversifications of AIIB investment in Nepal.

Similarly, stating Nepal’s plan to mobilise the climate change finance in Nepal’s development projects, he also urged for the AIIB support towards that end.

The AIIB has invested 40 million US dollars in the under-construction 216-MW Upper Trishuli-1 hydroelectricity project. It has investments in some under-construction transmission lines in Lumbini and Karnali provinces.

NEA urges AIIB to increase investment in power infrastructure expansion projects

Nepal Electricity Authority (NEA) has urged the Asian Infrastructure Investment Bank (AIIB) to increase investment in electricity infrastructure improvement and expansion projects.

During a meeting with a visiting AIIB delegation comprising the bank board of governors led by AIIB Director RMP Rathnayake on Monday, NEA Executive Director Kulman Ghising requested the AIIB to ramp up investment on cheaper interest rate in infrastructure improvement and expansion towards electricity transmission and distribution.

On the occasion NEA Executive Director Ghising apprised the AIIB delegation of the outline of the energy sector development in Nepal and the investment needs for the same. He said there is need of huge investment for building infrastructures for production, transmission and distribution of electricity for expanding electricity trade with the neighbouring countries.

“Nearly 60 billion US dollars investment (including for the private sector) is required for projects related to the production, transmission and distribution of electricity in order to implement the Energy Sector Roadmap until 2035 brought by the Ministry of Energy. Concessional loan at cheaper interest rate is required for this from multilateral institutions like the AIIB,” he added.

The AIIB team expressed the bank’s willingness to make investment required for the energy sector. The delegation on the occasion inquired about the progress of projects under construction on AIIB investment, environmental and social security topics, restructuring of the energy sector and market guarantee for power export.

Member of the AIIB board of directors from Nepal and chief of the International Economic Assistance Coordination Division, Ministry of Finance, Joint Secretary Shree Krishna Nepal also stressed on AIIB providing concessional loans for the development of the energy sector.

AIIB has provided concessional loan of 112 million and 300 thousand US dollars to Nepal for the implementation of the Electricity Distribution System Improvement and Expansion Project. This loan is being spent for carrying out electrification and distribution system expansion and improvement in Dang, Banke, Bardia and Rolpa of Lumbini province and the eight districts in Karnali province.

Nineteen 33/11kV distribution substations, 350 kilometres of the 33kV transmission line, 1798-kilometre 11kV line and a 3159 kilometres LT line is to be constructed as well as 1045 distribution transformers are to be installed as part of this project. Contract agreement and project design have already been completed for implementing the project.

AIIB has released 40 million dollars loan for the 216-megawatt Upper Trishuli-1 Hydropower Project which is under construction through foreign direct investment led by the Korean companies. RSS