World Bank Approves $257M for Nepal to Improve Power and Irrigation Services

In a significant move to support Nepal’s infrastructure development and agricultural resilience, the World Bank’s Board of Executive Directors has approved two major projects worth a combined $257 million. These initiatives aim to strengthen Nepal’s electricity distribution network and modernize irrigation services, helping to drive long-term economic growth, improve livelihoods, and enhance climate resilience.

Approved on May 29, the projects are designed to address two of Nepal’s most critical development challenges: reliable energy access and agricultural productivity. The funding includes $120 million for the Electricity Supply Reliability Improvement Project and $137 million for the Modernization of Rani Jamara Kulariya Irrigation Project – Phase 3.

Reliable Electricity for Four Provinces

The Electricity Supply Reliability Improvement Project, implemented by the Nepal Electricity Authority (NEA), targets a transformation of Nepal’s distribution system in Koshi, Bagmati, Karnali, and Sudurpashchim provinces. The project will finance the construction of new distribution substations, the upgrading of aging infrastructure, and the implementation of an advanced automated system for real-time monitoring.

These improvements are expected to reduce power outages, improve service quality for residential and industrial users, and support Nepal’s growing demand for clean, hydropower-based electricity.

“This investment will enhance energy reliability in key regions and enable efficient delivery of electricity to homes, businesses, and vital public services,” said David Sislen, Country Director for Maldives, Nepal, and Sri Lanka at the World Bank. “By promoting the use of clean energy, this project will also help Nepal reduce its carbon footprint and dependency on fossil fuels.”

Irrigation Modernization to Boost Agriculture

The Modernization of Rani Jamara Kulariya Irrigation Project – Phase 3 is jointly led by Nepal’s Department of Water Resources and Irrigation and the Department of Agriculture. It seeks to bring year-round irrigation to an additional 17,500 hectares of land in the Kailali district of Sudurpashchim Province. This expansion will benefit over 160,000 people, predominantly smallholder farmers, by boosting agricultural productivity and increasing food security.

The project aims to enhance farm income and livelihoods by providing access to reliable irrigation, introducing modern farming techniques, and building resilience against climate-induced risks such as droughts and floods. It also focuses on integrating climate-smart agricultural practices and improving water-use efficiency.

“Water availability and irrigation are critical to the success of Nepali farmers, particularly in climate-sensitive areas,” Sislen emphasized. “This project represents a long-term investment in food security, rural prosperity, and climate adaptation.”

Building Institutional Capacity and Sustainability

Beyond infrastructure, both projects include capacity-building components to ensure long-term impact. The Electricity Supply Reliability Improvement Project will strengthen the Nepal Electricity Authority’s operational and institutional capacity, while the irrigation project will empower Water Users Associations to manage and maintain the irrigation systems effectively.

This includes training, technical assistance, and the promotion of community-based, innovative solutions to ensure the sustainability and ownership of these public assets. Strengthening local institutions is seen as vital to the projects’ success and replicability in other parts of the country.

Supporting Nepal’s Sustainable Development Vision

The approval of these projects aligns closely with Nepal’s national development priorities and the World Bank’s Country Partnership Framework, which focuses on green, resilient, and inclusive development.

Both projects contribute to broader development goals, such as achieving reliable infrastructure, improving agricultural competitiveness, and addressing the challenges posed by climate change. By focusing on underdeveloped and remote regions, the initiatives also help bridge regional disparities and promote inclusive growth.

As Nepal continues to recover from the economic disruptions of the COVID-19 pandemic and cope with the impacts of climate change, strategic investments in energy and agriculture are viewed as essential building blocks for long-term sustainability and self-reliance.