World Bank approves $85M for Kabeli-A hydroelectric project

19 May 2014

The World Bank Group has approved $84.6M in financing for the 37.6MW Kabeli-A Hydroelectric Project in eastern Nepal.

The peaking run-of-river hydroelectric project will be built in Panchthar district in the eastern hills of Nepal, and connected to the national grid via the Kabeli Corridor Transmission Line, which also under construction as part of a separate project with World Bank financing.

The financing package for Kabeli-A includes a $40M credit and a $6M grant from the International Development Association (IDA), the World Bank Group's fund for the poorest countries, and a $19.3M loan from the International Finance Corporation (IFC). The package also includes a $19.3M loan from the Canada Climate Change Program (CCCP) for which the IFC acts as the implementing agency.

Kabeli Energy Ltd, which was awarded a build, own, operate and transfer (BOOT) contract for the Kabeli-A hydro project by the government of Nepal in 2007, will invest $23M million towards the $108.6M cost of the project. The company will be responsible for building the plant infrastructure, including a diversion dam, a settling basin, a headrace tunnel, a semi-underground powerhouse, and a tailrace tunnel.

"This World Bank-IFC project will demonstrate how public-private partnerships can help Nepal exploit its hydropower potential and eliminate electricity deficits while also developing hydroelectricity exports as an engine of the nation's economic growth," said Johannes Zutt, World Bank Country Director for Nepal.

The Kabeli-A project will help to address Nepal's energy shortages that are a major barrier to economic growth and overcoming poverty. The country suffers up to 18 hours of electricity blackouts a day and has less than 1 percent of its hydropower potential developed, according to the World Bank.

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