Opening the door for the first-ever trilateral power trade, Bangladesh has formalised its pledges to buy electricity from the 900-MW Upper Karnali hydel project, which is being developed by GMR Group. The move paves the way for the financial closure of the 900-MW Upper Karnali Hydro Electric Project.
The cabinet committee on Public Purchase (CCPP) of Bangladesh today gave the green signal to import power at a rate of 7.71 cents per unit – which is equivalent to Rs 8.80 per unit – for a period of 25 years, reported Bangladeshi newspaper Dhaka Tribune.
The energy-hungry Bangladesh will pay out a massive Tk381.60 billion (equivalent to Rs 511.69 billion) over 25 years to procure 500-MW of electricity.
On November 21, Bangladeshi State Minister for Power, Energy and Mineral Resources Nasrul Hamid –speaking at the inaugural ceremony of the seventh Power Summit in Kathmandu – had hinted that they would get the PPA rate endorsed from their cabinet at the earliest.
GMR appointed project head of Upper Karnali in Nepal Kulmeet Sharma confirmed the development.
The tariff rate – a key point in the discussions between Indian developer and Bangladeshi energy officials – is around 2.5 cents less than what GMR Energy had offered to Bangladesh. “It will now help GMR to arrange funds for the construction of the hydel plant because the lender will approve credit only if a market for the electricity to be generated by the project is secured,” he said, adding that now a letter of intent from Bangladesh is expected within 4 to 5 weeks. “After the project receives the letter of intent, it will open the doors to make financing arrangements to build the hydropower project in the western Nepal.”
GMR is accelerating the pace to complete the necessary work for energy trade and working towards the project’s financial closure by 2020, he added.
According to the GMR, it plans to collect 15 per cent of investment through Nepali banks and financial institutions and the initial agreement has been made with them. Nabil Bank and Nepal Investment Bank have shown interest to lead the debt consortium for the 15 per cent financing. “We are also in negotiations with Indian Exim Bank, Chinese Exim Bank, Asian Development Bank (ADB), World Bank (WB) and Netherlands Development Finance Company and other multilateral lenders for the remaining project financing,” Sharma said, adding that the project will be built as per engineering, procurement and construction (EPC) model and the contract will be awarded to the selected firms by March, if everything goes as planned. “GMR has selected three companies for civil, hydromechanical and other infrastructure works and seven companies for electromechanical works through open bidding.”
GMR added that it had signed an MoU with NTPC Vidyut Vyapar Nigam Ltd of India for sale of surplus electricity generated by the project. It is also trying to sign an off-take agreement with Bangladesh Power Development Board.
Nepal will receive 108 MW – out of the remaining 400 MW – free of cost, while GMR plans to sell the rest to the government of the Indian state of Haryana.
Bangladesh Power Development Board and GMR – last year – has signed a principal agreement on the commercial terms of the power purchase agreement (PPA), excluding tariff rates and they were negotiating on the rates since then due to high tariff proposed by the developer.
The export-oriented Upper Karnali hydropower project has a high price tag due to surcharges placed on the use of Nepali and Indian transmission lines. As the developer is required to relay energy using Nepali and Indian infrastructure, it will have to pay wheeling charges to both Nepal and India, and apart from the charges, the loss of electricity in long-distance transmission is also usually high.
Bangladesh signed a memorandum of understanding (MoU) with India’s NVVN to import electricity from the Upper Karnali scheme via India during Bangladeshi Prime Minister Sheikh Hasina’s visit to India in April 2017. As Indian laws don’t allow private developers to export electricity produced in third countries over Indian transmission lines, Bangladesh signed a MoU with the state-owned cross-border electricity trading agency while GMR was a witness.
GMR Energy and the government signed a MoU on construction of the hydel plant in 2008. Modelled to run in full capacity for only three months in a year, cost of the reservoir-type Upper Karnali is estimated to hover around $1.1 billion.
The cabinet committee on Public Purchase (CCPP) of Bangladesh today gave the green signal to import power at a rate of 7.71 cents per unit – which is equivalent to Rs 8.80 per unit – for a period of 25 years, reported Bangladeshi newspaper Dhaka Tribune.
The energy-hungry Bangladesh will pay out a massive Tk381.60 billion (equivalent to Rs 511.69 billion) over 25 years to procure 500-MW of electricity.
On November 21, Bangladeshi State Minister for Power, Energy and Mineral Resources Nasrul Hamid –speaking at the inaugural ceremony of the seventh Power Summit in Kathmandu – had hinted that they would get the PPA rate endorsed from their cabinet at the earliest.
GMR appointed project head of Upper Karnali in Nepal Kulmeet Sharma confirmed the development.
The tariff rate – a key point in the discussions between Indian developer and Bangladeshi energy officials – is around 2.5 cents less than what GMR Energy had offered to Bangladesh. “It will now help GMR to arrange funds for the construction of the hydel plant because the lender will approve credit only if a market for the electricity to be generated by the project is secured,” he said, adding that now a letter of intent from Bangladesh is expected within 4 to 5 weeks. “After the project receives the letter of intent, it will open the doors to make financing arrangements to build the hydropower project in the western Nepal.”
GMR is accelerating the pace to complete the necessary work for energy trade and working towards the project’s financial closure by 2020, he added.
According to the GMR, it plans to collect 15 per cent of investment through Nepali banks and financial institutions and the initial agreement has been made with them. Nabil Bank and Nepal Investment Bank have shown interest to lead the debt consortium for the 15 per cent financing. “We are also in negotiations with Indian Exim Bank, Chinese Exim Bank, Asian Development Bank (ADB), World Bank (WB) and Netherlands Development Finance Company and other multilateral lenders for the remaining project financing,” Sharma said, adding that the project will be built as per engineering, procurement and construction (EPC) model and the contract will be awarded to the selected firms by March, if everything goes as planned. “GMR has selected three companies for civil, hydromechanical and other infrastructure works and seven companies for electromechanical works through open bidding.”
GMR added that it had signed an MoU with NTPC Vidyut Vyapar Nigam Ltd of India for sale of surplus electricity generated by the project. It is also trying to sign an off-take agreement with Bangladesh Power Development Board.
Nepal will receive 108 MW – out of the remaining 400 MW – free of cost, while GMR plans to sell the rest to the government of the Indian state of Haryana.
Bangladesh Power Development Board and GMR – last year – has signed a principal agreement on the commercial terms of the power purchase agreement (PPA), excluding tariff rates and they were negotiating on the rates since then due to high tariff proposed by the developer.
The export-oriented Upper Karnali hydropower project has a high price tag due to surcharges placed on the use of Nepali and Indian transmission lines. As the developer is required to relay energy using Nepali and Indian infrastructure, it will have to pay wheeling charges to both Nepal and India, and apart from the charges, the loss of electricity in long-distance transmission is also usually high.
Bangladesh signed a memorandum of understanding (MoU) with India’s NVVN to import electricity from the Upper Karnali scheme via India during Bangladeshi Prime Minister Sheikh Hasina’s visit to India in April 2017. As Indian laws don’t allow private developers to export electricity produced in third countries over Indian transmission lines, Bangladesh signed a MoU with the state-owned cross-border electricity trading agency while GMR was a witness.
GMR Energy and the government signed a MoU on construction of the hydel plant in 2008. Modelled to run in full capacity for only three months in a year, cost of the reservoir-type Upper Karnali is estimated to hover around $1.1 billion.
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