The Ministry of Finance (MoF) has confirmed that it had received a letter from ADFD notifying the approval of the loan, reported Republica.

Nepal is expected to employ the ADFD funding for the 140MW Tanahun Hydropower Project.

MoF joint secretary Madhu Kumar Marasini noted, "However, meeting for further negotiations and signing of the loan agreement has not been fixed so far. The loan agreement will be signed after a detailed discussion on the terms and conditions between the two parties"

The construction of the project at Byas municipality of Tanahun district by Nepal Electricity Authority (NEA) is expected to commence by 2014.

"The project is too important to us. The government will do its best to complete the project on time," stated Marasini.

The development of the project is expected to be completed by 2020 with interest-free credit extended to NEA by the government.

Previously, Nepal had secured loans from the Asian Development Bank (ADB), Japan International Cooperation Agency (JICA) and European Investment Bank (EIB), totaling a $370m for hydropower development in the country.