JICA provides ODA loan in 12 years, to be used to construct Tanahu hydropower plant

The Japan International Cooperation Agency (JICA), today, signed an Official Development Assistance (ODA) loan agreement worth 15.137 billion yen (approximately Rs 14.168 billion) with the government for the Tanahu Hydropower Project.

The 140MW reservoir hydropower project to be constructed in Tanahu district will boost the current power generation capacity — that stands at 706MW as of 2011 — by 20 per cent and is expected to contribute to economic growth and improve the lives of Nepali citizens, said ambassador of Japan to Nepal Kunio Takahashi during the signing ceremony.

The project will be co-financed by Asian Development Bank (ADB), European Investment Bank (EIB) and Abu Dhabi Fund for Development. Among them, JICA is the largest partner and the first to sign the loan agreement.

Though Nepal has an abundance of water resources, it struggles with blackouts that last up to 16 hours during the dry season. The new hydropower plant is expected to produce stable power even during the dry season as most of the other power plants are run-of-the river types and cannot generate enough electricity in the dry season.

For the first time in the country, Tanahu Hydropower Project will introduce a unique sediment flushing system, which Japan has developed over the years. The advanced system regularly discharges sedimentation accumulated at the bottom of the reservoir to maintain the reservoir capacity, JICA said, adding that if all the facilities are put into service, the project will be completed by October 2020.

Joint secretary and chief of the International Economic Cooperation Coordination Division under the Finance Ministry Madhu Kumar Marasini and director general of South Asia Department at JICA Masataka Nakahara signed and exchanged the 40-year repayment — that also has a 10-year grace period — loan agreement that will attract 0.01 per cent interest annually, on behalf of their respective institutions.

Likewise, finance secretary Shanta Raj Subedi and ambassador Takahashi signed the Exchange of Note of the project on behalf of their respective governments.

Due to the political instability since the 1990s, no new Japanese ODA loans had been signed with Nepal since 2001. In response to the people of Nepal, who desired the 'dividends of peace', JICA decided to extend the loan agreement, the first in the last 12 years, JICA said, adding that it will continue to contribute towards economic growth and social development in Nepal by organically linking its three types of assistance — Japanese ODA loans, technical cooperation and grant aid.