The Asian Infrastructure Investment Bank is interested in investing in two of the five infrastructure projects Nepal had proposed in the first phase, to be followed by other projects, government officials have said.

According to officials at the Finance Ministry and the Ministry of Urban Development, AIIB officials during a recent visit to Nepal were ready to provide loan for urban infrastructure development activities in six municipalities of Tarai under the Urban Infrastructure Investment Project.

Under the project, Nepal aims to develop infrastructure in 18 municipalities, mainly the headquarters of the Tarai districts.

The institution based in Beijing could also provide credit for Nepal Distribution System Upgrading and Extension Project, which aims to improve the electricity distribution system at major load centres including the Kathmandu Valley, Biratnagar, Birgunj and other areas where the demand for power is high.

“They are positive about financing these two projects in the first phase,” said Baikuntha Aryal, joint-secretary at the Finance Ministry. “When the credit will be available depends on our preparations.”

Officials, however, said the project areas and the loan amount were yet to be specified mainly due to the lack of preparations on the Nepal side.

In the first week of November, an AIIB team led by its manager Ke Fang met with government officials and discussed about financing the projects proposed by Nepal.

Nepal had proposed five infrastructure projects for financing by the China-led bank in its first annual meeting held in Beijing in June.

The other projects are Sharada-Babai Hydropower Project, a storage type project planned to be built on the Babai and Sharada rivers; Pokhara-Beni Jomsom Road Upgradation; and Samakhusi-Tokha-Chhahare Road Upgradation and Extension Project.

However, project preparation has been a bigger challenge for Nepal whenever any donor agency or lender is ready to help.

In a recent interview to the Post in Beijing, Liqun Jin, chairman and president of the AIIB, said, “There are a lot of things that can be done in Nepal. Get the projects ready. We are willing to do it. If a country is ready, we can do multiple projects at a time.”

Dipendra Nath Sharma, secretary at the Ministry of Urban Development, said that of the 18 municipalities in the Tarai where works would be carried out, feasibility studies have been done in only a few of them. “As the AIIB seems to be ready to support the project, the Finance Ministry has told us to rush the preparations,” he said.

The government has planned to invest Rs56 billion under the Urban Infrastructure Improvement Project to upgrade the facilities in 18 municipalities, which serve as the district headquarters. Rs500 million has been set aside for each municipality.

Under the project, an intensive urban development programme will be implemented by selecting projects related to road, sewage, drinking water, renewable energy, bus park, fun park, education and health in Mahendranagar, Dhangadhi, Gularia, Nepalgunj, Taulihawa, Siddharthanagar, Parasi, Birgunj, Kalaiya, Gaur, Malangawa, Jaleshwor, Janakpurdham, Siraha, Rajbiraj, Inaruwa and Biratnagar.

“We plan to negotiate for $150 million (Rs16.5 billion) from the AIIB for implementing the project,” said Secretary Sharma. The government will also provide counterpart funds.

According to the Urban Development Ministry, urban infrastructure improvement activities are being carried out in seven municipalities of the Tarai with assistance from the Asian Development Bank. The AIIB funds would be used to develop other municipalities.