Kathmandu, July 29:

High-level government officials and experts concerned with the hydropower sector have underscored the need for effective utilisation of resources available with Power Development Fund (PDF) to promote the role of private sector in building small and medium-sized hydropower projects. Assistant minister for water resources, Binod K Shah speaking at a stakeholders’ meet on ‘Guidelines for Availing Financing from the Power Development Fund’, admitted of not being able to fully capitalise the potential in hydropower sector. Shah said that the distribution network of electricity should be strengthened and the private sector investment in hydropower is crucial to upgrade our capacity. He added that financing

for investors interested in hydropower projects is not available easily, an area in which PDF can play an instrumental role.

Shovan Dev Pant, CEO of Nepal-Bangladesh Bank (NBB) which is the administrator of Power Development Fund (PDF), said that out of the total 42,000 MW of hydropower generation being ‘technically and financially’ feasible, we have been able to generate less than 600 MW due mainly to scarcity of funds. Given such a context, the role of PDF is very much crucial for co-financing projects with international and domestic lenders, including commercial banks, investment funds, export credit agencies and multilateral institutions, Pant informed. The initial corpus of the PDF is $35 million, received under the IDA loan by the government from the World Bank. However, Pant expressed confidence that PDF will attract more funds from the World Bank as well as other bilateral and multilateral financial institutions and donors.

The aim of the PDF, according to Pant, is to act as a catalyst to maximise the inflow of private capital for the development of hydropower.

PDF will provide long-term debt financing to private sector for small and medium-sized hydropower projects and contribute to the acceleration of hydropower development in the country by overcoming the lack of debt financing, provide additional comfort to private investors willing to promote ‘first time power projects’. Pant said that NB Bank has been appointed as an administrator of PDF through a competitive bidding process which will facilitate the Power Development Fund Board (PDF), formed by the government under the ministry of water resources to facilitate project identification, project appraisal, monitoring sub-borrower performance under loans from PDF and to handle debt service collections and management information. Jay Keshar Mackay, chairman of Power Development Fund Board (PADFB), said the board will play a crucial role to give additional comfort to private sector hydropower promoters of small and medium sized project. Effective utilisation of fund is needed to boost hydropower development, he added. Mahendra Nath Aryal, secretary at the ministry of water resources said the private sector is facing problems such as weak adoption of technology and lack of capital for playing a significant role in hydropower sector. The government is determined to resolve the problems, he added.