Although Nepal has high potential to generate hydroelectricity, the lack of sufficient investment in this sector has put the whole nation in the dark. People have to go through extremely harsh load-shedding hours and the economy of the nation has suffered a lot due to the lack of electricity.

In such a scenario, the Asian Development Bank (ADB) is lending $150 million for a $500 million project that will build a hydropower plant of a 140-megawatt capacity.

The hydel plant will be built on the Seti River in Tanahu district to generate electricity all year around. The plant will be the country’s first major hydropower plant with water storage capacity and a sediment flushing system.

Currently, nearly all of the hydropower plants generate power from the run of the river, which makes for lower output during the dry season as the flow in the river decreases.

At a time, when even a single megawatt of electricity is deemed precious, the funds provided by the ADB will come in as a major boost for the country.

“Nepal has an energy crisis, and this is affecting badly economic prospects,” said Yongping Zhai, Director, Energy Division in ADB’s South Asia Department. “This energy project is a means to stop this crisis.”

Electricity demand is growing at 10% every year in Nepal, but no significant moves have been taken in this sector to solve the power problem.

Currently the country’s total installed power generation capacity is around 700 megawatts – largely from hydropower. This represents only 1.5% of Nepal’s hydropower potential.

To ensure steady supply even during the dry winter months of November through April, the plant will be fed from a 7.26 square kilometer reservoir, according to ADB.

In addition to building the plant and a transmission system, the project will also provide at least 17,636 homes in the area of the hydropower plant with direct connections to the national power grid. Only around one-third of households in Nepal are connected to the electricity distribution grid, with connection rates much lower in rural areas.

The project will be co-funded by ADB and the Japan International Cooperation Agency lending, the European Investment Bank, and the Abu Dhabi Fund for Development.