The Ministry of Finance (MoF) has signed a loan agreement worth Rs 18.25 billion for the modernisation of Nepal’s electric grid with Asian Development Bank (ADB).

The agreement was signed by MoF Joint Secretary Shree Krishna Nepal and ADB Office in- Charge for Nepal Residential Office, Rudy Van Dale amid a function held in Kathmandu on Wednesday.

Issuing a press statement, MoF said that the energy saved from the power grid modernisation project can be exported to the neighbouring countries and the project will also help in curbing the loss incurred due to power leakage.

Speaking at the event, Joint Secretary Nepal said that the major objective of the agreement was to improve the country’s power transmission capacity and improve the power transmission as well as distribution system under the Electric Grid Modernisation Project.

“We are expecting this agreement to play a crucial role in make the power supply sustainable and reliable by modernising the power grid in the country and to develop and strengthen the capacity of Nepal Electricity Authority (NEA),” Nepal said.

According to Nepal, the total investment cost of the electric grid modernisation project is about Rs 22.81 billion of which ADB will bear Rs 18.25 billion and NEA will invest the remaining Rs 4.56 billion.

According to the agreement, the project will finance automation of 40 grid substations throughout the country, construction of three units of modern 132/11 kV grid substations with automation (each with 2×45 megavolt amperes [MVA] capacity) together with 16 km of 132 kV double circuit underground line along Chobhar-Lagankhel-Sinamangal route.

The project will also finance the construction of five km of 66 kV double circuit underground transmission line along Sinamangal-Chabahil in Kathmandu valley.

The project also covers upgrading of 237 km of 132 kV transmission lines with more efficient high-temperature-low-sag conductors; and commissioning of transmission system consisting of four automated grid substations with capacity of 290 MVA and 48 km transmission lines in Myagdi and Dhading districts.