KATHMANDU, SEPTEMBER 19
Nepal Rastra Bank Governor Maha Prasad Adhikari has said that the country's trade deficit situation would end if the country could export electricity worth Rs 130 billion annually.
In a meeting with the Independent Power Producers' Association-Nepal (IPPAN) on Monday, Governor Adhikari shared that the country's trade deficit can be reduced drastically if Nepal can export electricity worth Rs 130 billion annually.
IPPAN President Ganesh Karki urged Governor Adhikari to make arrangements for banks and financial institutions to allocate 20 per cent of their total investment to the energy sector.
In response, Adhikari clarified that there are no issues related to investment in the banking sector and assured that such issues will not arise even if projects having a production capacity of 20,000 megawatts are developed within the next decade.
According to the association, an investment of Rs 555 billion is required within five years for the development of power projects with a capacity of 3,700 megawatts, including 1,500 megawatts of run-of-the-river (RoR) and 2,200 megawatts of peakingrun-of-the-river (PRoR) projects.
Similarly, an investment of Rs 2,055 billion will be required over the next decade to fulfil the export agreement reached between India and Nepal. IPPAN also clarified that an investment of over Rs 3,750 billion would be required to reach the target of producing 25,000 megawatts as mentioned in the energy decade.
Stating that the central bank is providing loans by adding one per cent to the base rate to projects with installed capacity of over 200 megawatts, IPPAN requested Governor Adhikari to implement this rule for all hydropower projects.
IPPAN also requested that the central bank arrange refinancing by using the latest financial instruments available in the international market such as sovereign bonds, green bonds, or climate bonds. In response, the governor said that the matter of bond facilities is related to the Ministry of Finance but shared that the NRB is ready to facilitate the related arrangements.
To produce 25,000 megawatts and export 15,000 megawatts in 10 years, the association has also requested Adhikari to make arrangements for banks and financial institutions to invest in the form of capital, and to make the policies and rules related to hedging, investment, dividends, and return of investments easy, fast and transparent for international investors.
IPPAN has also requested the central bank to reduce the risk-weighted average of hydropower projects to 50 per cent for the projects in operation and to 75 per cent for the projects under construction at present. The association has also called for necessary policy arrangements in terms of interest subsidy/re-loan, interest capitalisation, loan restructuring, and moratorium period to complete the reconstruction and construction of the hydropower projects damaged by the devastating floods and landslides.
Responding to IPPAN's concerns over flood-affected projects, Governor Adhikari said that the central bank has already taken measures to provide relief to such projects.
A version of this article appears in the print on September 20, 2023, of The Himalayan Times.
