Nepal | May 29, 2020

MoE to use local financial resources to build hydro projects

Himalayan News Service
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Kathmandu, June 7

The Ministry of Energy (MoE) will soon start building hydroelectric projects of up to 25 megawatts throughout the country by setting up independent companies in which the government, local residents, community organisations and cooperatives will be equity partners.

The MoE is taking this initiative in line with its programme titled ‘Electricity to People through People’s Investment’.

“We received approval from the Ministry of Finance to set up the first model company yesterday. We will soon finalise a project and roll it out,” MoE Deputy Spokesperson Gokarna Raj Pantha told The Himalayan Times.

The concept of roping in local residents and bodies to develop hydroelectric projects was introduced to make productive use of financial resources available at the local level.

“This will ultimately help in electrification process, generate jobs at the local level, raise people’s income and uplift living standard of local people,” Pantha said. “This concept will also instil a sense of ownership among locals in projects being built in their locality.”

To kickstart the programme, the MoE is mulling over building 13.5MW Maiwa Khola Hydroelectric Project in Taplejung. The Department of Electricity Development (DoED) has already conducted feasibility study of the project.

Although the Energy Ministry was also planning to build 12.25MW Madi Khola Hydroelectric Project in Rolpa at the time when the concept was first floated, it is now being said Nepal Army has shown interest to develop this project.

The MoE is also eyeing to build 15MW Chepe, 25MW Sankhuwakhola and 5MW Dotigad projects under this model. Also, projects of one to 25 MW that the private sector has failed to build for a long time are likely to be rolled out under this model.

The MoE has proposed formation of a six-member committee under the DoED director general to identify projects, conduct their feasibility studies, monitor implementation and coordinate with concerned authorities and bodies to facilitate implementation.

As per the plan, independent companies will be established to build each of the hydroelectric projects. These projects will be built with debt-equity ratio of 70:30.

This means 70 per cent of the fund required to build the project will be in the form of loans. This credit will be mobilised equally through financial institutions and the government.

The remaining 30 per cent of the fund required to build the project will be obtained from investors, which includes different ministries, the DoED, Nepal Electricity Authority (NEA), Hydroelectricity Investment and Development Company, district development committees, municipalities, village development committees, local cooperatives, district chapters of private sector umbrella bodies, community and consumer rights organisations, and local residents.

“As the company repays its debt, equity portion of shareholders will increase proportionately,” Pantha said, adding, “The government intends to control over 50 per cent stake in each of the projects.”

To ensure there is no problem in evacuation of electricity generated by these projects, the MoE will instruct NEA to extend transmission lines to sites where hydroelectric plants are located. Also, access ways will be built by concerned Road Division Office or District Technical Office, the MoE said.



A version of this article appears in print on May 08, 2016 of The Himalayan Times.

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