Electricity Transmission Project

Nepal has a large gap between electricity supply and demand, with the nation’s power grid meeting only half of the country’s electricity demand, especially in low river-flow or dry season.

The USD 398.2 million Electricity Transmission Project (ETP) is designed to increase domestic electricity consumption by improving both availability and reliability of electricity in the nation’s grid, increase investment powered by more reliable electricity and increase government revenues, by exporting surplus electricity. The Government of Nepal has designated the ETP as a National Pride project, which will also build the necessary infrastructure in Nepal to facilitate Nepal’s planned India interconnection (from New Butwal, Nepal to Gorakhpur, India). The ETP will comply with all GoN and MCC policies relating to technical, environmental and social standards. The following paragraphs discuss the major activities under the ETP: Transmission Lines, Substations and Power Sector Technical Assistance and the Millennium Challenge Account (MCA) Partnership Program.

Transmission Lines

The Transmission Lines (TL) component will focus on the design and construction of approximately 315 km of a double-circuit 400 kV transmission line (including some quad-circuit towers) to provide a vital missing link of different river basins to the existing high voltage grid in Nepal. The alignment of the transmission line and segments were selected following careful analyses and feasibility studies that weighed both technical and economic merits, the importance in meeting Nepal’s medium and long-term electricity supply goals, and consistency with Nepal’s domestic and cross-border transmission investment plans.


Three new 400 kV indoor gas-insulated substations (GIS) will be constructed under the ETP. These include the Ratmate substation at Ratmate of Belkotgadhi Municipality in Nuwakot District, the New Damauli substation in Tanahun District, and the New Butwal substation at Bhumahi in Nawalparasi West District. The transmission lines will also interconnect with existing Nepal Electricity Authority substations at Lapsiphedi, Bhaktapur District and New Hetauda, Makawanpur District.

Power Sector Technical Assistance

The Power Sector Technical Assistance (TA) Activity will help strengthen the performance of Nepal’s power sector institutions, including the Electricity Regulatory Commission (ERC) and the NEA. The support to ERC will include assisting the independent electricity sector regulator to create an enabling environment of transparency, efficiency, and competition in Nepal’s power sector.
The technical assistance to ERC will focus on embedding experts within ERC to improve ERC’s skills in rulemaking, dispute resolution, and economic and technical regulation. Similarly, the assistance will also focus on supporting NEA to establish an improved process and decision-making framework for the transmission business to strengthen network development, operations and maintenance.

MCA Partnership Program

The ETP also includes a “Benefit Integration through Knowledge Sharing and Social Acceptance” component that is referred to as the as MCA Partnership Program Sub-Activity. The objective of the MCA Partnership Program is to build trust and rapport, and share ETP benefits with local communities. Such sharing of benefits through is expected to help develop relationships with the project communities for smooth and timely completion. The increase in benefits for local stakeholders is also expected to reduce opposition to the planned developments. The objective of this component is to ensure that the benefits from infrastructure development are equitably shared with people directly and indirectly affected by the project. The benefit sharing mechanisms go beyond compensation and mitigation measures and may apply throughout the life of the project. The MCA Partnership Program will be considered for any affected wards traversed by the right-of-way (RoW) of the transmission lines and substations.