IFC, partners provide more than $450 million for Upper Trishuli-1

International Finance Corporation (IFC) – a member of the World Bank Group – and a consortium of other lenders today finalised a $453 million debt financing package that will support the construction of a landmark hydroelectric plant in central Nepal.
The plant – Upper Trishuli-1 – will increase Nepal's electricity supply by one-third from today’s levels and provide clean, reliable power to some 9 million people, part of a larger effort by IFC to create markets and fight poverty in the country.
IFC is the lead arranger of the debt package, which includes eight other lenders, and is one of the largest foreign direct investments (FDI) in Nepal’s history. The financing is being provided to the privately-owned Nepal Water and Energy Development Company. The firm will develop and operate a 216-megawatt (MW), run-of-the-river hydroelectric plant on the Trishuli River about 70-km north of Kathmandu. Officially known as Upper Trishuli-1, the project’s financing structure, competitive tariffs, and use of internationally accepted contract standards is expected to set a standard for future hydropower projects in Nepal.
“This project is a game-changer for Nepal," said energy minister Barshaman Pun, during the signing ceremony of the financial closure. “Not only will it power hundreds of thousands of homes and businesses, but it will also serve as an example of how private companies can help Nepal expand its hydropower sector and attract much needed foreign direct investment,” he added.
Nepal's rivers – fed by runoff from the Himalaya Mountains – could support 43 gigawatts (GW) of electrical generation capacity. But less than three per cent of that has been developed as of today. As well, the country has suffered from blackouts and brownouts, hampering businesses and making life difficult for residents.
"There is no question that Nepal has the potential to be an energy powerhouse," said the chief executive officer of the Nepal Water and Energy Development Company Bo-Seuk Yi. “To realise that promise, Nepal can enlist the help of private companies, which have the capital and expertise to make major projects a reality,” he added.
The new hydroelectric plant is expected to be completed in 2024. Along with providing clean, reliable power to millions, it will set new environmental and social-impact benchmarks and enhance benefits for local communities. Furthermore, a cumulative impact assessment of existing and planned hydropower projects has been completed for the Trishuli basin, which will help guide sustainable development in the watershed.
“This project represents a significant milestone in the development of Nepal’s hydropower potential as it has been able to attract meaningful private sector participation, particularly from international investors,” said IFC director for South Asia Mengistu Alemayehu. “It also shows the unprecedented resilience and commitment by the government, the sponsors, and other stakeholders against all odds over the years,   including a major earthquake,” he said, adding that the development partners expect the project to become a model for expanded investments in developing Nepal’s hydropower to meet the growing domestic demand and export to the neighboring countries.
IFC and a consortium of Korean and Nepali partners, in collaboration with the Government of Nepal, have spent over seven years developing the Upper Trishuli-1 project, which is a prime example of IFC’s ability to create markets through upstream project preparation work over many years in low-income countries.
The Nepal Water and Energy Development Company’s key owners are Korea South-East Power, Daelim Industrial, Kyeryong Construction Industrial, and IFC. IFC is providing $190 million in financing, including $95 million of equity and loans from its own account, and $95 million as the implementing entity for other funding sources. The Multilateral Investment Guarantee Agency (MIGA) – yet another member of the World Bank Group – will provide $135 million in guarantees to cover political risk for the sponsors. Other financiers include the Export and Import Bank of Korea, the Asian Development Bank (ADB), the Asian Infrastructure and Investment Bank (AIIB), the Korea Development Bank (KDB), the United Kingdom’s development finance institution, Commonwealth Development Corporation (CDC), the Dutch Entrepreneurial Development Bank,Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden NV (FMO), the OPEC Fund for International Development, and Proparco.
Because of its unique development impact, pioneering features, and demonstration to private investors, the project also includes support from the International Development Association’s (IDA) Private Sector Window, a global facility of concessional funds to support high-impact private sector investments in lower-income countries, the Finland-IFC Blended Finance for Climate Program, and the Climate Investment Funds.
As part of the record $75 billion IDA18 replenishment, the World Bank Group created the $2.5 billion IDA Private Sector Window to catalyze private sector investment in the poorest and most fragile countries. Recognising the key role of the private sector in achieving IDA18 objectives and the Sustainable Development Goals (SDGs), the window provides concessional funds for co-investment alongside IFC and Multilateral Investment Guarantee Agency (MIGA) private investments. Concessional funds help to mitigate risk and reduce barriers, which unlocks and crowds in private investment in emerging markets.
Likewise, IFC – a sister organisation of the World Bank and member of the World Bank Group – is the largest global development institution focused on the private sector in emerging markets. “We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities where they are needed most,” the agency said, adding that it delivered more than $19 billion in long-term financing for developing countries – in the fiscal year 2019 – leveraging the power of the private sector to end extreme poverty and boost shared prosperity.

ADB approves $80 million loan

The Asian Development Bank (ADB) has approved an $80 million loan to modernise and expand the wastewater network and treatment facilities in the populous Kathmandu valley.
"Better and broader sewage and wastewater systems will improve health and living conditions and reduce river pollution in the Kathmandu valley where the population has vastly outgrown the existing wastewater network," said senior urban development specialist in ADB’s South Asia Department Manoj Sharma.
The project continues work that ADB has been doing with the government since 2000 to improve water supply in the Kathmandu valley. It includes the development of the 27.5-km Melamchi tunnel, which will bring an additional 170 million litres of water per day into Kathmandu valley from 2016 when the tunnel is due to be completed.
Currently, the valley only receives around 100 million litres per day. Kathmandu valley, home to 2.51 million people, is growing at 4.3 per cent per annum, faster than the 1.4 per cent per annum growth rate in the rest of the country as per Census 2011.
However, low investment in sewerage systems is forcing communities to dump waste into the Bagmati river, which flows through Kathmandu and is revered by Hindus and Buddhists.
It has increased health risks and put an undue burden on the poor and vulnerable groups, notably women. The latest project, set for completion in 2018, will rebuild or lay around 514-km of sewers and modernise and expand five wastewater treatment plants that would increase the treatment capacity from around 16 million litres per day to around 90 million litres per day.
Project staff will also work with schools and communities to increase awareness of hygiene and sanitation and with the government to improve environmental monitoring and financial management of wastewater systems.
The goal is to ensure the systems collect more than 80 per cent of the area’s sewage in 2018 from five per cent in 2012 and, by 2020, to ensure some 1.96 million beneficiaries are linked to the wastewater network.
In 2012, only 1.20 million people were hooked up to a wastewater system. The $137 million project will also be financed with $40.7 million to be provided by the government and $16.3 million from Organisation of Petroleum Exporting Countries (OPEC) Fund for International Development (OFID).
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members — 48 from the region. In 2012, ADB assistance totalled $21.6 billion, including cofinancing of $8.3 billion.

OFID pledges $20 million assistance loan

The OPEC Fund for International Development (OFID) has agreed to provide a loan assistance of $20 million (about Rs 1,680 million) to Nepal for the implementation of the Rural Connectivity and Community Development Project.
Joint secretary and chief of the foreign aid coordination division of the ministry of finance Lal Shanker Ghimire and director general of the OPEC Fund for International Development on behalf of Nepal Suleiman J Al-Herbishand signed the loan assistance agreement and exchanged it at the OFID headquarters in Vienna, Austria on Friday.
Co-financed by the Asian Development Bank, the project aims at improving the connectivity of rural communities, enhancing economic and employment opportunities and increasing access to market and social services.
The loan assistance received as co-financing from OFID will be utilised to promote rural economic and social development through small–scale infrastructure and capacity building sub-projects.
The project will be implemented in 18 districts — Baglung, Baitadi, Bajhang, Bajura, Darchula, Dolpa, Gorkha, Humla, Jajarkot, Jumla, Kalikot, Lamjung, Myagdi, Mugu, Okhaldhunga, Ramechhap, Solukhumbu and Taplejung — and expected to be completed by December 31, 2016.
Nepal expressed its sincere appreciation to the OPEC Fund for International Development for this loan assistance and for their continued support in the socio-economic development of Nepal.
Among the donors, OPEC had contributed 0.5 per cent in the total disbursed foreign aid in Nepal in fiscal year 2010-11, according to the Development Cooperation Report 2010-11 published by the Finance Ministry which has started making aid transparent due to allegations that foreign aid lacked effectiveness due to lack of transparency .
The need for greater transparency in foreign aid flows features very prominently in the commitments made initially in the Paris declaration in 2005 and subsequent High Level Forums, the latest being the High Level Forum on Aid Effectiveness held in Busan, Korea, in December 2011. Nepal has been extensively involved in international efforts to improve the quality of information available from development partners on the nature and volume of their assistance.

ADB, OFID sign agreement to boost cooperation

Asian Development Bank (ADB) president Haruhiko Kuroda and OPEC Fund for International Development (OFID) director-general Suleiman Jasir Al-Herbish on Monday signed on behalf of their respective organisations a memorandum of understanding (MoU) that will expand the existing cooperation between the two organisations.
The agreement was signed just before the 44th Annual Meeting of the ADB’s Board of Governors, which runs from May 3 to 6 in Ha Noi, Viet Nam.
“In working together, ADB and OFID will improve coordination in development activities in our common partner countries and in those priority sectors that we both share,” said Kuroda ahead of the signing ceremony.
Under the MoU, ADB and OFID will work closely to identify projects with a view to jointly financing them. The two organisations will exchange information to better support each others’ activities and will hold consultations to discuss issues of common interest, including helping the region’s poor to access energy to support economic growth and improve livelihoods.
“This agreement enhances our existing framework of institutional cooperation, benefiting OFID and ADB common partner countries and Asian regional initiatives," Al-Herbish said commenting on the signing.
The MoU formalises a long-standing relationship between the two organisations that dates back to 1976 when OFID was established.
To date, the two institutions have jointly implemented 90 projects amounting to $765 million in Afghanistan, Azerbaijan, Bangladesh, Cambodia, India, the Kyrgyz Republic, Lao People’s Democratic Republic, Maldives, Nepal, Pakistan, Papua New Guinea, Philippines, Samoa, Solomon Islands, Sri Lanka, Tajikistan, Thailand, and Uzbekistan.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members -- 48 from the region. In 2010, ADB approvals, including cofinancing, totaled $17.51 billion. In addition, ADB's ongoing Trade Finance Programme supported $2.8 billion in trade.
OFID’s primary aim is to contribute to the socio-economic advancement of developing countries. OFID is present in almost all sectors of development and is effectively contributing to global efforts toward meeting the MDGs and the 'missing nineth goal' which is the eradication of energy poverty, a key pillar for sustainable socio-economic growth and poverty reduction. Since its inception, OFID has committed more than $13 billion in support of sustainable development.

OFID extends loan for infrastructure

OPEC Fund for International Development (OFID) has agreed to provide a loan assistance of $17 million to Nepal for the implementation of urban infrastructure improvement project.
Lal Shanker Ghimire, joint secretary, Finance Ministry and Suleiman J Al-Herbis, director general, OFID, signed the loan agreement to this connection in Vienna, Austria today.
The loan assistance will be used to improve and make municipal services affordable in key regional urban centers of Nepal, according to a press release by the Finance Ministry.
Under the project, civil works like drainage and sewerage systems, roads and lanes, solid waste management systems and community development, water supply system, and other infrastructure facilities will be improved. It will also implement land acquisition and resettlement, the release said.
The project is also co-financed by the Asian Development Bank (ADB), and the global environment facility. Nepal had signed the agreement with ADB in Kathmandu on October 26.