Banks, hydropower firm ink accord

Ankhukhola Hydropower Company has signed an agreement with six banks and financial institutions that will see Rs 700 million lent to the hydel project that aims to start electricity generation by June 2010.
A consortium of four commercial banks -- Prime Commercial Bank, Machhapuchchhre Bank, Sunrise Bank and Kist Bank led by Prime Commercial Bank; one development bank -- Kasthamandap Development Bank and a finance company -- Standard Finance -- have signed the agreement to lend the seven megawatt (MW) Ankhukhola Hydropower Project that has already finished 30 per cent of its preliminary work.
The hydel project estimated to cost around Rs 1006 million has been financed up to Rs 230 million by Prime Commercial Bank, Rs 170 million by Machhapuchchhre Bank, Rs 100 million each from Sunrise Bank and Kist Bank, and Rs 50 million each from Kasthamandap Development Bank and Standard Finance, making it a total of Rs 700 million. The promoters of the hydropower company will bear 30 per cent of the total estimated cost.
For hydropower projects, financial management is one of the key issues. However, domestic banks are slowly finding it more confortable to fund hydropower projects. Consortium leader Prime Commercial Bank has lent Rs 270 million to Mai Khola Hydropower also as it is one of the most lucrative investments.
A consortium of eight banks and financial institutions -- led by Citizens' Bank International -- has lent moeny to the 10 MW Lower Modi hydel project recently.
"Ankhukhola hydel project has 15.66 per cent internal rate of returns," Bishwonath Kadel, executive director of the hydel company, said adding that the payback period of the project is estimated at six years and two months.
D B Bamjan, chairman of the hydropower company, that has a 7 MW installed capacity said that the company has already done Power Purchase Agreement (PPA) on June 4, 2009 after it got the survey licence on July 31, 2008.
Located in Dhading, a district neighbouring Kathmandu, Ankhu Khola is one of the major tributaries of Budhi Gandaki. "With complete indigenous technology, the hydro power company shall generate average annual energy up to 39.265 GWh," he said adding that the generated electricity will be connected to the national grid through Nepal Electricity Authority (NEA) sub-station in Dhading Besi.
According to the PPA, NEA will buy the electricity generated by Ankhukhola Hydropower Company at Rs 7 per unit in dry season and Rs 4 per unit in wet season.