Out of the total aid package, $50 million will be spent on installing solar stations in Devighat, Pharping, Trishuli and Kulekhani which will generate 25 MW of electricity. The rest of the money will be spent on activities to streamline power distribution and cut leakage. Joint secretary at the Finance Ministry Madhu Kumar Marasini and World Bank Country Manager for Nepal Takuya Kamata signed an agreement on the financial assistance at the Finance Ministry on Friday. Immediately after that, a subsidiary loan agreement was signed with the Nepal Electricity Authority (NEA).

According to the ministry, the solar plant is expected to be completed this year while schemes to reduce leakage will continue until 2020. The plan aims to slash the current rate of leakage of 25 percent to 10 percent.

Speaking at the signing ceremony, Joint Secretary Marasini said the accord had been signed as the country needed power at any cost. He added that the solar plant was expected to start generating 20 MW of power from June and go into full production by September.

However, NEA Managing Director Mukesh Kafle said that it would be challenging to complete the plant before the end of the year as the tender process itself would take a lot of time. The electricity generated by the solar plant is expected to cost Rs 30 per unit.   

The power produced by the plant will be fed directly into the national grid to supply it to the Kathmandu valley.

The solar stations will be built on NEA-owned land

which means it will have to acquire private land to facilitate implementation of the project.

Meanwhile, leakage control measures are expected to save power amounting to more than 100 MW by 2020. Losses in distribution are one of the reasons for the prevailing lengthy long-shedding hours.

World Bank Country Manager Kamata said that the bank’s support was aimed at helping Nepal reduce its electricity deficit. Energy has been identified as a key priority area of World Bank financing in Nepal in its latest country partnership strategy.