$257M World Bank Loan: Nepal Electricity Grid Upgrade & Agriculture Irrigation Boost
2nd June 2025, Kathmandu
Nepal is set to receive a major boost in electricity and agriculture. The World Bank has approved two new loans totaling $257 million. These funds will support projects that focus on improving the electricity supply and increasing agricultural productivity.
$257M World Bank Loan
Strengthening Electricity Supply In Four Provinces
The first project, worth $120 million, aims to improve Nepal’s power distribution. It targets Koshi, Bagmati, Karnali, and Sudurpaschim provinces. The Nepal Electricity Authority (NEA) will lead the implementation.
This initiative will help construct new substations and upgrade existing infrastructure. It will also install automated systems for real-time monitoring. These changes will make the electricity network more stable and reliable.
The project responds to Nepal’s growing demand for electricity. Power shortages and voltage fluctuations have been major challenges. With better infrastructure and smarter systems, NEA hopes to deliver uninterrupted electricity to more households and industries.
Why This Matters For Energy Security
Nepal depends heavily on hydropower. The country has great potential in clean energy, but weak distribution remains a barrier. This new project intends to unlock that potential. It supports clean, affordable, and sustainable energy access.
Additionally, reducing power outages will help industries operate efficiently. This will attract private investment and support job creation in energy-related sectors.
Boosting Irrigation In Kailali District
The second project, called the Modernisation of the Rani Jamara Kulariya Irrigation Scheme – Phase 3, is worth $137 million. It focuses on the Kailali district in the Sudurpaschim Province.
The project aims to bring year-round irrigation to 17,500 hectares of farmland. It will benefit around 160,000 people, mostly small farmers. The Department of Water Resources and Irrigation and the Department of Agriculture will implement the plan together.
This investment will help farmers plant more crops throughout the year. It will reduce dependence on seasonal rainfall. As a result, crop yields are expected to rise significantly.
Modern Agriculture Needs Reliable Water
Agriculture remains the backbone of Nepal’s economy. However, farmers still struggle with water shortages. Limited access to irrigation has made them vulnerable to climate shocks.
This irrigation project hopes to solve that issue. It includes upgrades to canals, control structures, and water delivery systems. Farmers will also receive training on efficient water use.
By ensuring a steady water supply, the government hopes to increase food security. This will also help farmers earn more income and reduce poverty in rural areas.
Focus On Climate Resilience And Technology
Both projects have one thing in common. They aim to make Nepal more resilient to climate change. The electricity project will promote green energy. Meanwhile, the irrigation plan will reduce climate risks in agriculture.
Moreover, both projects will use modern technology. Smart grids and automated systems will make the power supply more efficient. On the other hand, advanced irrigation techniques will conserve water and increase crop productivity.
These efforts show Nepal’s shift toward technology-based solutions. They also highlight the government’s commitment to building a stronger and more sustainable future.
Capacity Building For Long-Term Results
The World Bank is not only funding infrastructure. It is also investing in capacity building.
The electricity project will strengthen the Nepal Electricity Authority’s skills and systems. Staff will be trained on using automated systems and managing modern substations.
Similarly, the irrigation project will support Water Users Associations. These local groups will learn how to manage irrigation systems effectively. The goal is to ensure long-term sustainability.
When institutions are stronger, infrastructure performs better. This approach focuses on empowering local systems rather than relying on short-term fixes.
What The World Bank Says
David Sislen, World Bank Country Director for Maldives, Nepal, and Sri Lanka, emphasized the importance of these investments. He called electricity and irrigation “fundamental inputs for sustainable development.”
He added that both projects will help connect communities, improve services, and strengthen climate resilience. The Bank believes that better infrastructure will create new economic opportunities, especially for rural populations.
Supporting Nepal’s Development Goals
These investments align with Nepal’s national goals. The government wants to expand access to electricity and irrigation. It also wants to reduce poverty and boost the economy through agriculture and energy.
Moreover, these projects are part of Nepal’s Green, Resilient, and Inclusive Development (GRID) strategy. GRID focuses on building infrastructure that is environmentally friendly and socially inclusive.
By improving basic services, the government hopes to build a more equitable society. It also wants to prepare for future climate-related challenges.
Looking Ahead: Benefits Beyond Infrastructure
The impacts of these projects go far beyond construction. Improved power supply will help schools, hospitals, and businesses. More irrigation will increase food production and strengthen local economies.
In both urban and rural areas, people will see real changes in their daily lives. Children will study under steady lighting. Farmers will plant crops without fear of drought. Small industries will grow without power cuts.
These projects will create a better future for thousands of Nepalis. They also offer a model for combining infrastructure, technology, and climate resilience.
Final Thoughts
The World Bank’s $257 million investment in Nepal marks a major step forward. With reliable electricity and better irrigation, the country is on a path toward inclusive and sustainable development.
As these projects roll out, they are expected to bring lasting improvements in infrastructure, livelihoods, and environmental sustainability. Nepal now has a strong opportunity to turn these investments into long-term national gains.
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