Nine int’l lenders to invest Rs 51bn

Kathmandu, October 31

Nine international lenders, including International Finance Corporation, have pledged to invest Rs 51 billion, as per today’s exchange rate, in Upper Trishuli-1 project.

The 216-megawatt project in Rasuwa district is being developed by Nepal Water and Energy Development Company.

Korea South East Power Co Ltd has 50 per cent stake, Daelim Industrial Co Ltd has 15 per cent share, Kyeryong Construction Co Ltd has 10 per cent stake, IFC — the private sector lending arm of World Bank Group — has 15 per cent, and domestic Jade Power has 10 per cent share in NWEDC.

The company will develop the project as per the build, own, operate, transfer model.

Earlier, the project had received investment commitment of $60 million from Asian Development Bank, $171 million from IFC, $90 million from Asian Infrastructure Development Bank, $100 million from ExIm Bank of Korea, $35 million from Netherlands Development Finance Company and $50 million from Commonwealth Development Corporation. Similarly, Korea Trade Insurance Corporation had pledged $70 million, Proparco Development Bank, France, $25 million; and Organisation of the Petroleum Exporting Countries $30 million for the project.

“The ratio of investment by international lenders will be finalised and made public tomorrow,” informed Giri Raj Adhikari, general manager of NWEDC.

According to him, the company will ink financial closure agreement worth Rs 51 billion ($450.3 million) with lenders tomorrow, while the construction is slated to begin in 2020.

As per NWEDC’s agreement with Nepal Electricity Authority, the project should be connected to the national grid by 31 March 2024.

This is the largest foreign direct investment in a private sector-led hydropower project.

NWEDC and the Ministry of Energy started negotiations for project development in January 2014, with the aim of initiating construction of the project in 2017. However, owing to frequent change in government, the company could sign the project development agreement with the government only on 29 December 2016.

NEA has inked a dollar-denominated power purchase agreement with the company. This means the power utility will make payment in dollars for electricity generated by the project for the first 10 years or till the payback period of foreign loan from the commercial operation date, whichever comes first. NEA has offered tariff per unit at Rs 8.40 during dry season and Rs 4.80 during wet season.

The government has listed the project as backbone of power supply to Kathmandu Valley with it being an alternative to Kulekhani reservoir project. Total energy generation capacity of the project is 1,533 gigawatt hours per year and the developer will supply 39 per cent or 106 MW of the total energy during dry season.

Once the construction is completed, the developer will operate the project for a period of 30 years. The project will then be handed over to the government in good condition. The government will provide cent per cent corporate tax waiver for the initial 10 years and 50 per cent waiver for subsequent five years.