Kathmandu, February 20

The Investment Board Nepal (IBN), a government entity, is preparing to extend the financial closure deadline of 900MW Upper Karnali Hydropower Project, an export-oriented project being built by an Indian firm.

This is the third time the project’s financial closure deadline is being extended. Financial closure guarantees that a developer has secured adequate funds to build a project.

The last financial closure deadline of the project had expired on September 18. Since then the IBN has not taken a formal decision to extend it, although the developer has formally requested the Nepali authority to do so.

“The project developer is close to signing the power purchase agreement (PPA) with Bangladesh.

We are hoping the deal will be sealed before the Investment Summit schedule to be held in Kathmandu from March 29-30,” said IBN CEO Maha Prasad Adhikari. “Once the pact is signed, the project’s viability will go up, helping the developer to reach the financial closure. This is the reason why we are positive about extending the financial closure deadline.”

The project is being developed by Grandhi Mallikarjuna Rao (GMR), an Indian firm.

On February 11, Minister for Energy, Water Resources and Irrigation, Barsha Man Pun, had discussed with RK Singh, minister for new and renewable energy of India, a wide range of issues related to bilateral cooperation in the energy sector, including construction of Upper Karnali hydel project. As per the ministry secretariat, GMR officials, who were present at the meeting, had requested Nepal to extend the financial closure deadline by a year. During the meeting, GMR officials had expressed commitment to sign the PPA with Bangladesh before the Investment Summit going to be held in Nepal.

Earlier, the government had said it would sign trilateral pact on power trading agreement with India and Bangladesh. During the Nepal-Bangladesh Joint Steering Committee meeting held in Kathmandu on December 4, Bangladesh had agreed to buy 500 megawatts of electricity from the Upper Karnali Hydropower Project.

The Haryana government has also agreed in principle to buy 300MW electricity from the hydel project.