The Nepal government has emphasized in 10th five year plan in the production of extra 10000KW electricity from Pico- and Micro hydro to electrify the hilly areas of Nepal. These small hydro electricity schemes would not only serve as a powerful tool for rural poverty alleviation but also reduce dependency on imported fossil fuels. The project lies in the hilly areas of Nawaparasi and Tanahu districts, where the kerosene, fuelwood and fatwoods are used for household lighting and cooking. Pico hydro, which is small, manageable and low cost technology can be the good means of electrification in rural areas where the settlements are scattered here and there. The project will support rural communities to install 6 Pico hydro stations generating a total of 30 KW electricity. The pre- energy survey has showen that the installation would curb release of 10 tons of carbon dioxide per annum into the atmosphere. Two pico hydro service centers for maintenance will also be established. Likewise, installation of 300 Improved Cooking Stoves (ICS) would also reduce 500 tons of CO2 emission into the atmosphere. Further, the project will help support in implementation of socio-economic development of the local people.