Nepal Biogas Project: First Payment Made for Increased Support to Nepal Biogas Program

Contacts: 
In Kathmandu: Rajib Upadhya (9771) 4226792/3
rupadhya@worldbank.org
In Washington: Cathy Russell (202) 4588124 
crussell@worldbank.org

Kathmandu, Nepal – July 30, 2009 – The World Bank implemented Global Partnership on Output Based Aid (GPOBA) project in Nepal has made the first payment of $592,200 to the Alternative Energy Promotion Centre (AEPC) for successful 2008 delivery of verified new biogas plant installations in Nepal.   This project provides increased access to clean and affordable energy for rural Nepalese households, and successfully installed 4,772 new biogas plants eligible for payments under the GPOBA grant.

The World Bank-administered GPOBA program signed a grant agreement with the Government of Nepal in October 2007 providing a total of US$5 million in support, which will provide payment for the verified installation of up to 37,000 new biogas plants in 48 remote districts of Nepal. The program is being managed by the Alternative Energy Promotion Center (AEPC) with implementation support provided by the Biogas Sector Partnership Program-Nepal (BSP-N).  It uses an innovative “output-based aid” approach in which subsidy payments are made based on verified results.

“The project builds on Nepal’s impressive track record with mainstreaming biogas plants as a practical and affordable solution to energy problems in rural Nepal,” said Susan Goldmark, World Bank Country Director for Nepal.  “It converts animal and human waste into a clean source of cooking fuel -- thereby removing the need to use wood, dried dung and other fossil fuel sources of energy.  The biogas byproduct can also be used as a natural fertilizer to increase agricultural yields.  This is a small but important step to improving the lives of rural Nepalis.”

The GPOBA project aims to support replacement of traditional energy sources used by the rural population, such as firewood and kerosene, with modern biogas plants. Biogas plants use anaerobic decomposition of organic material (mostly animal manure) to produce a flammable gas called biogas, which can be used to meet rural cooking and lighting needs. GPOBA’s grant payment is made to AEPC for successful commissioning of new biogas plants ranging in capacity from 4m3 to 8m3. Even the smallest plants with a 4m3 capacity produce enough gas to run a cooking stove for nearly 2.5 hours daily.

Switching to biogas reduces carbon emissions and decreases the frequency of respiratory infections that result from burning solid fuels in poorly ventilated households.  Families will also save approximately three hours of labor per day from the conveniences of gas in addition to financial savings from not purchasing other fuels and fertilizers. Women and girls, who are traditionally responsible for collecting firewood and cooking and cleaning, will be among this project’s primary beneficiaries. Furthermore, access to biogas will enable families to use gas lanterns after sunset providing light for children’s studies or other household activities.

“The GPOBA fund received will help AEPC to install additional biogas plants in the future, in more remote and needy areas in Nepal,” said Dr. Narayan Prasad Chaulagain, Executive Director of AEPC.

Mr. Saroj Rai, Executive Director of BSP-Nepal added, "The GPOBA funding for BSP is an achievement that has further motivated us to promote biogas with increasing focus on market development in remote areas."

The GPOBA funds will complement the Fourth Phase of Nepal’s Biogas Support Program (BSP-IV), which aims to support biogas plant installation for over 135,000 new rural households through 2011.  The Biogas Support Program was started in 1992 by the Netherlands Development Organization (SNV) together with the Government of Nepal to promote environmentally friendly and affordable energy to remote rural areas, and has helped to install over 200,000 biogas plants to-date in rural Nepal.

The full Nepal Biogas Program is co-funded by the Government of Nepal, SNV, and the German Development Bank (KfW), and is also receiving carbon finance revenue from the World Bank Community Development Carbon Fund (CDCF).