Investment Board of Nepal approves investment worth Rs 8.84 billion

Investment Board of Nepal (IBN) has approved an investment of Rs 8.84 billion for the development of the 54 megawatt (MW) Lower Apsuwa Hydropower Project.

A Board meeting held today took the decision to approve the investment, IBN spokesperson Pradhumna Prasad Upadhyay confirmed.

Likewise, the IBN has decided to form a dialogue committee under the leadership of the CEO to table a proposal on project development agreement (PDA), financing modality and other issues regarding the West Seti Hydropower Project. 

The meeting chaired by the chairman of the IBN Prime Minister KP Sharma Oli has also entrusted the Board's CEO to submit the feasibility study report of Kathmandu-Hetauda-Birgunj podway project and development and operation of Panchkhal Special Economic Zone (SEZ) as well as provide the survey license for the projects.

The IBN meeting also provided approval to the developer company Karnali Transmission Company for the Environmental Impact Assessment (EIA) and feasibility study of the new route alignment for the development of transmission line for the Upper Karnali Hydropower Project of 900 MW.

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel, Physical Infrastructure and Transport Minister Devendra Dahal, National Planning Commission (NPC) vice chairman Prof Dr Shivaraj Adhikari, chief secretary Eaknarayan Aryal, central bank governor Dr Bishwo Nath Paudel and other top ranking officials attended the meeting.

Government yet to take 50 per cent ownership of Khimti hydro

The government is preparing for interim arrangements to take control of half ownership of the Khimti Hydropower Project as it has failed to draft necessary law in time.
The Ministry of Energy, Water Resources and Irrigation (MoEWRI) confirmed that the government is preparing to introduce interim arrangements to manage and operate the Khimti Hydropower Project. “The project will not be shut down,” the ministry said adding that the ministry will soon finalise all the details to take 50 per cent ownership of the project.
According to project development agreement (PDA) signed on January 15, 1996, Nepal Electricity Authority (NEA) has to take 50 per cent ownership of the project by July 11 (yesterday) but the government’s delay in drafting the necessary law has made the fate of the 60-megawatt (MW) project uncertain.
But NEA and the Energy Ministry both claimed that they have not been able to do enough homework to sign the agreement to take control of its stake, also due to the outbreak of the coronavirus pandemic.
According to the PDA, from today all procedures related to acquire 50 per cent ownership should have been completed by NEA. “And the project should have been operating through a joint venture,” it reads, adding that the JV will also determine and certify the valuation of the project site, undertake share distribution, and determine new power purchase rate.
Earlier, the ministry had formed a team led by a joint secretary with officials of NEA to facilitate the process but it has not made any progress in forming the joint venture company.
The ministry has however already sent a letter to the promoter, Himal Power Ltd, for an interim management. “Though the agreement has expired the ministry has forwarded a draft memorandum of understanding (MoU) to the promoter to make interim arrangements for the operation of the Khimti hydel plant,” the ministry sources said, adding that they have also asked Himal Power to bear the expenses of the operational cost for the time being, which the government will adjust later. “The ministry is though prepared for the final negotiations with Khimti’s promoters in the process of taking over Khimti, failure of arrival of the concerned officials of the promoter company due to spread of coronavirus worldwide has delayed it.”
Himal Power Ltd – which currently has 100 per cent ownership of the project – has been tasked with developing the project under a 50-year lease contract with the government. According to the Himal Power, Khimti hydel project is generating 350GWh of energy annually, for which NEA is paying around Rs 5 billion. The NEA has been incurring an annual loss of Rs 2 billion while buying power generated by Khimti because of US dollar power purchase agreement (PPA).
NEA had initially signed the PPA with Khimti at 5.2 cents per unit, which was later revised upwards to 5.9 cents. The state power utility is buying electricity at up to Rs 21 per unit from the project as the price of the US dollar has surged massively in the last one decade.

Upper Bhote Koshi starts test generation

A 45-MW Bhote Koshi Hydropower Project – located at Bhotekoshi Rural Municipality in Sindhupalchowk – has started power generation from today.
Though the hydel project had been commissioning energy since January 2001, it was closed after the April 25, 2015 devastating earthquake and floods and then again landslides, which had completely damaged the project.
“The hydropower started test generation after completing renovation of structures damaged by the floods, though it took 20 months to reconstruct damaged structures,” according to general manager of Bhote Koshi Power Company Bikram Ratna Sthapit. “The project started test generation at 12 noon today,” he said, adding that electricity generated by the project has been connected to the national grid. “The project will begin commercial generation after completion of 15-day test generation.”
The hydel plant got permission to start test generation after Nepal Electricity Authority (NEA) completed examining our structures and plant," he added. “The NEA officials studied the project for eight days before giving the permission.”
There is a provision in Power Development Agreement (PDA) that NEA needs to first test any project before it starts commercial production. “The plant is running to its full capacity as water flow in the river falls during winter months," Sthapit added. The plant is currently producing 22 MW to 25 MW due to low water flow currently. Water flow in Bhote Koshi River starts increasing from mid-March thus from mid-July, the project will operate to its full capacity.
The reconstruction work of the Upper Bhotekoshi Hydropower project was completed by a Chinese company Sino Hydro’s Bureau 11 at a cost of about Rs 7 billion, according to the project. The floods had submerged the project's dam located in 10 Kilo area and deposited huge boulders and debris which also damaged other head works. A majority of the works including civil, hydroelectrical and hydromechanical works was done by Sino Hydro while works related to installation of turbine and generator were handled by an American company named Francis Turbine.
The hydel project was first hit by the devastating earthquake of 2015. Likewise, floods struck the project site when 80 per cent of post-quake reconstruction completed, the project informed, adding that it lost nearly 60 per cent of the cost due to the earthquakes and floods. “The project cost has climbed to Rs 17 billion, up from the estimated Rs 10 billion.”
Before the 2015 earthquakes, landslide of Jure had also damaged transmission line of the project which halted power generation for nearly six months. Earthquake struck the project again four months after it had repaired the transmission line. The project has been losing $ 22-24 million revenue annually due to delay, Sthapit added.

Nine international lenders to invest $453 million in Upper Trishuli-1

After a long homework of around decade, Nepal Water and Energy Development Company Private Ltd (NWEDC) today signed a foreign direct investment (FDI) agreement with a consortium of nine international lenders agreeing to inject $453 in debt financing for the construction of 216-MW Upper Trishuli-1 (UT-1) Hydropower Project.
Representatives from IFC, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Export-Import Bank of Korea (K-EXIM), Korea Development Bank (KDB), CDC Group PLC (CDC), Netherlands Development Finance Company (FMO), PROPARCO Development Financial Institution, and the OPEC Fund for International Development (OFID) signed the financial agreement of $453.2 million – approximately Rs 51.30 billion – for the loan financing of Upper Trishuli-1 Hydropower Project.
Arranged by IFC, the loan agreements were signed to provide a total amount of $453.2 million for the project. “Loans amounting to $161.3 million from IFC, $60 million from ADB, $39.6 million from AIIB, $100 million from K-EXIM, $30.8 million from KDB, $21.9 million from CDC, $15.4 million from FMO, $11 million from PROPARCO, and $13.2 million from OFID have been provided for the project,” according to a press note issued by the Investment Board Nepal (IBN).
Speaking at the agreement signing ceremony, minister for Energy, Water Resources and Irrigation Barshaman Pun said that the project is a game changer as it serves as an example of how the private companies could help Nepal expand its hydropower sector and attract the much needed FDI.
Assuring of the support, assistance, and coordination needed to expedite the process to meet the timeline set by project development agreement (PDA) for the financial closure, he claimed that the project will be an example for foreign investors.
Located in Rasuwa district, the project will generate annual energy of 1,533 gigawatt per hour (GWh) from three power generating units of total installed capacity 216 MW. “Total 38.75 per cent of the annual capacity will be generated in dry season and the remaining 61.25 per cent will be generated in wet season,” according to the press note, which reads that the delivery point of such energy generated is the under-construction Trishuli-3B Hub substation in Nuwakot. The project site is located near the Kathmandu load center and can provide a firm power of 104 MW all round the year.
During the signing ceremony, Prime Minister KP Sharma Oli – in a video message – said that it is one of the largest FDI projects of the country. “The project is important as additional 9 million people will benefit as the project comes into operation,” he said, adding that it will also prove crucial to support the government’s plan to end poverty and foster the economy. “The government urges foreigners to invest in such mega projects wholeheartedly.”
The project includes 29.5-metre high dam in Trishuli River, 9.7 kilometer-long headrace tunnel, 292- metre high vertical pressure tunnel and an underground powerhouse.
Addressing the signing ceremony, finance minister Dr Yuba Raj Khatiwada said that the project is a pilot project for bigger projects. “We are working on creating investment friendly regulations and have been very clear about the PPA policy including PPA in US dollar terms,” he said, adding that land and forest acquisitions have been made very simple to attract the investment.
Upper Trishuli-1 is the first project in South Asia to successfully complete the process of Free Prior Informed Consent (FPIC) from the local people in the project area.
The construction of the project will be done based on a fully wrapped engineering, procurement and construction (EPC) contract. A joint venture of Korean firms — Daelim Industrial Co and Kyeryong Construction Industrial Co — will carry out main construction works of the project that is scheduled to be completed is 5 years.
According to NWEDC, the construction of the project will start after the approval of the
Financing Agreements by the central bank and after the fulfillment of other conditions in the signed Financing Agreement documents. Earlier, the company had seen a funding oversubscription with nine multinational lenders offering a loan of $631 million against the $453 million required in debt finance.
“There is no question that Nepal has the potential to be an energy powerhouse,” chief executive officer of NWEDC Bo-seuk Yi, said, on the occasion. “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.
Likewise, director of infrastructure finance, South Asia, Central Asia, and West Asia at ADB’s Private Sector Operations Department Shantanu Chakraborty said that the agreement is a landmark transaction that will provide strong incentives for further private sector investment in Nepal’s energy sector.
To ensure it provides sustainable benefits, Chakraborty said that this project will adopt international best practices in safeguards management and will also introduce measures to promote gender equality, including job opportunities for women and better access to education, health care, amenities, and infrastructure.
On the occasion, IFC director for South Asia Mengistu Alemayehu said that the 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.
In July, the cabinet decided to extend the tax holiday to the company a few weeks after the anti-dollar alliance – Asian Infrastructure Investment Bank (AIIB) – approved its first $90 million loan to the project, raising eyebrows over the government’s decision to give tax holiday for the company, which has a dollar PPA with the power utility.
The project development agreement of the project was signed on December 29, 2016 while the power purchase agreement between NWEDC and Nepal Electricity Authority (NEA) was signed in January 2018.
When the NEA signed a power purchase agreement with Nepal Water and Energy Development Company a year ago to purchase the electricity generated by the project, the state-owned power utility agreed to pay in US dollars for a period of 10 years or until the portion of the investment made with foreign loans is recovered by the developer, whichever comes first.
After the row over hedge fund, the developer agreed to provide 17 per cent of the energy to the power utility free after 14 years and the government and electricity authority agreed to contribute two-thirds of the amount to the hedge fund.
According to the provisions, the company will be exempted from 100 per cent of income tax for the first 10 years of commercial operation and 50 per cent exemption for an additional five years.

IBN, Chinese company seal deal for Damak Industrial Park

The government and Damak Clean Industrial Park Pvt Ltd (DCIPPL) signed a memorandum of understanding (MoU) for the construction of the 'China-Nepal Friendship Industrial Park' in Province 1.
The chief executive of Investment Board Nepal (IBN) Maha Prasad Adhikari and the chairman of DCIPPL, Govinda Bahadur Thapa signed the MoU amid a ceremony held in the capital today.
The industrial park – located at Damak in Jhapa district – is going to be built with a total investment of around Rs 64 billion from Chinese investor Lhasa Economic and Technology Development Zone Jing-Ping Joint Creation Construction Project Development Co Ltd.
Spread over an area of 1,600 hectares, the industrial park will be built in public-private partnership (PPP) model, according to the IBN. “The government has already completed the process of land acquisition to construct the park. The construction will start as soon as the Detailed Project Report (DPR) for construction, operation and management of the industrial park is presented followed by the Project Development Agreement (PDA), the board informed, adding that the park will be spread over Gauradaha municipality, Kamal rural municipality and Damak municipality of Jhapa. “The project is the first one in Nepal supported under the Belt and Road Initiative (BRI) of China.”
The project is expected to add a new dimension in sectors like expansion of investment between Nepal and China and infrastructure development. The project is also expected to contribute to the expansion of physical infrastructure, fulfill local demand, and support export promotion, according to vice mayor of Lhasa Municipal People's Government Liu Guang Min.
Speaking on the occasion of MoU signing, Liu said that the industrial park will contribute toward employment generation and socio-economic development of Nepal.
Likewise, chairman of the industrial park Govinda Thapa said that the construction work of the project will present a model of efficiency and transparency. “The project will establish a new model of development in Nepal,” he said, adding that the project will give us a model that the entire country and the people can be proud of.
Likewise, Adhikari, on the occasion, said that the construction of the industrial park will contribute to the development of Nepal. Chairman of the Industrial Area Development Limited Nanda Kishor Basnet said that the project will be Nepal's model project. “Nepal did not have projects other than hydropower projects in PPP model,” he said adding that that it would be Nepal's first non-hydro project under PPP model.
The signing of the MoU precedes the visit of Chinese president Xi Jinping that is scheduled for next week.
Though the government has approved Chinese investment of Rs 64 billion to construct Nepal-China Friendship Industrial Park, the construction work is still unsure as the landlords are not in consensus about the use of their lands.
Some of the landlords have not accepted the compensation amount stating that the amount is too low.
According to Industrial Area Development Limited, some 117 landlords have received Rs 120.7 million till now. The compensation has been distributed according to the recommendation from a committee formed under the coordination of the Chief District Officer (CDO).
The District Administration Office has classified the land into three category: cultivable land, riverside land and land occupied by bushes. Compensation of Rs 2.2 million has been approved for a bigha of cultivable land, Rs 800,000 for land occupied by bushes, and Rs 200,000 for riverside land. The government has provided Rs 430.44 million for compensation distribution.
The government has distributed the compensation to the landlords of Damak Municipality, Gauradaha Municipality, and Kamal Rural Municipality. However, landlords of 61 units of land have not been identified.
Basnet said that the construction work will begin by mid-December in 500 bigha land of Jharka in Kamal-7. However, the landlords of Kamal-7 have suspected the government's intention and blaming that it is a ploy to capture their land. “No paper has mentioned that the land is taken for the establishment of the Industrial Park, they blamed, adding that it might be a strategy of the government to buy the land for cheap. The landlords have also claimed that the recommended compensation amount is less the government valuation of their land. “A compensation of Rs 200,000 per bigha is recommended,” they said, adding, “However, government rate is Rs 700,000 per bigha.
Basnet, however, claimed that the compensation amount has been decided according to the Land Acquisition Act.

Sutlej offers to sell 10 per cent power to Nepal

The Indian power developer Sutlej is proprosing to sell 10 per cent of the energy – available for export from mush-awaited Arun III Hydropower Project – to Nepal.
SJVN Arun III Power Development Company wrote – last week – to Investment Board Nepal (IBN) asking if the Nepal government would be willing to buy 10 per cent of the total energy available for export.
According to the project development agreement (PDA) signed between SJVN and the board, Nepal will receive 21.9 per cent of the total energy generated by the project free of cost while the developer has rights over the rest of the output. The agreement also requires the developer to offer 10 per cent of the electricity from its share to Nepal on commercial terms.
"As we have secured a market for 90 per cent of our share of the energy, we have sent a proposal to board asking if the Nepal government would be interested in buying the rest of the electricity as provisioned in the PDA,” said resident representative of SJVN in Nepal Hari Ram Subedi.
The board has forwarded Sutlej proposal to Nepal Electricity Authority (NEA), the sole buyer of electricity in the country.
The NEA – confirming that the government power utility has received the proposal – said that it will ask Sutlej to clearly mention the terms and conditions and the tariff rate. "If Sutlej quotes a reasonable rate, the NEA will purchase the electricity from Arun III," informed the NEA.
The Indian developer of the export-oriented 900 MW plant located in eastern Nepal is carrying out work on the construction site of the Arun III plant on a war footing after Nepali and Indian Prime Ministers jointly laid the foundation stone for the project remotely this May during Indian Prime Minister Narendra Modi’s Nepal visit.
According to the board, Nepal will receive Rs 348 billion over 25 years from the project. The project developer will also provide 21.9 per cent of the energy free of cost, which is worth Rs 155 billion, plus another Rs 107 billion in royalties.

Government to hand over Tamakoshi-3 hydro project licence to TBI

The Energy Ministry is going to award project feasibility survey licence of Tamakoshi-3 Hydropower Project to TBI Holding.
The company has filed a feasibility survey licence application at the Department of Electricity Development (DoED) on October 11 for project that was earlier expected to generate the 650 MW. But the SN Power – a Norwegian energy developer – had left the project as it found the project not feasible to generate 650 MW and sell it to Indian market.
The department approved the application and forwarded it to the Energy Ministry for final approval, according to the department's spokesperson Babu Raj Adhikari.
"The documents presented by TBI Holding along with the application were complete," he said, adding that the department has forwarded the application to the ministry recommending that survey licence be awarded to the company.
TBI Holding – a company owned by newly elected president of the Non Resident Nepali Association (NRNA) Bhaban Bhatta – will survey the Tamakoshi 3 within 2 years to finalise the generating capacity, return on investment and its feasibility.
The government has authorised the board to implement hydropower projects with installed capacity of 500MW or above. According to the Investment Board Act 2011, the board has sole authority to implement project of 500 MW and above.
The project was in the basket – after the SN Power walked out in 2016 – of the Investment Board Nepal (IBN) as it was still expected to generate 650 MW, though there has been not any possibility of generating more than 305 MW due to current policy brought by the former energy minister Janardan Sharma.
Tamakoshi 3 – a run-of-the-river (RoR) project located in Dolakha and Ramechhap districts – is projected to cost Rs 130 billion, if it is developed as according to the SN Power's plan.
The board claimed that it was gearing up to launch international bidding to develop the hydropower as it has not revised the generation feasibility according to the new policy brought by energy minister Janardan Sharma. The new policy has many provisions that has forced the hydel project to downsize to almost half.
However, the board also claimed that it has prepared a modality for the construction of the project under the public private partnership (PPP) model with a mix of domestic and international investments after the potential developer Statkraft of Norway pulled out from the project in January 2016 before signing project development agreement (PDA).
"The board had forwarded the proposal to the ministry in April, seeking suggestions," according to higher official at the board, who claimed that it was waiting for the ministry’s response. 
SN Power – the Norwegian company – had spent Rs 1 billion to conduct a survey, obtain technical updates and perform environment impact assessment after receiving a survey licence from the government in March 2008.
Officials said it had abandoned the project over concerns about finding buyers for the electricity produced by the project. Statkraft had planned to sell energy in India but it lost hope after it could not get price it wanted from India and selling in the domestic market was also not feasible. 

GMR to sell Upper Karnali electricity to Bangladesh

GMR Upper Karnali Hydropower is planning to sign a power purchase agreement (PPA) with the Bangladeshi government.
GMR Upper Karnali Hydropower – a subsidiary of GMR Energy India – is preparing to sign grid connection agreement with Bangladesh Power Development Board (BPDB) and Haryana Power Generation Corporation (HPGC) to sell at least 300 megawatts (MW) to each.
A team from the Bangladeshi government is likely to visit the project site in western Nepal soon and start PPA negotiations with the developer.
"We have already signed the memorandums of understanding (MoUs) with them,” said chief operating officer of Hydro Business of GMR Energy Harvinder Manocha. "After BPDB and HPGC sign power purchase agreement with us, we will be able to obtain loans for financial closure."
The GMR Upper Karnali Hydropower is close to achieving financial closure.
GMR Energy India – the developer of the 900 MW Upper Karnali Hydroelectric Project – will evacuate energy produced by the project to Bangladesh via India.
Bangladesh signed a memorandum of understanding (MoU) with India’s NTPC Vidyut Vyapar Nigam (NVVN) to import electricity from Upper Karnali via India during Bangladeshi Prime Minister Sheikh Hasina’s visit to India in April 2017. "The tariff rate will be mutually finalised by GMR and Bangladesh after negotiations."
According to GMR, 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 the witness. "It is clearly written in the MoU that the energy that NVVN will supply to Bangladesh will come from Upper Karnali."
Manocha said that some international lenders have shown interest to provide loan for GMR’s Upper Karnali project as the developer is gearing up to sign PPA for 600 MW of the energy out of installed capacity of 900 MW. Developer has to achieve financial closure within the deadline of September 18, 2017 given by the Investment Board Nepal (IBN).
"Everything is moving ahead smoothly," he said, adding that the company wants to develop Upper Karnali as a regional project. "It will be a model project for foreign investors willing to come to Nepal."
When the project development agreement (PDA) was signed in September 2014, the cost of the 900-MW project was expected to hover around $1.03 billion. However, the developer believes that cost could escalate to $1.5 billion.
GMR has also shortlisted the bidders for civil and electromechanical works and bidders will be finalised soon. Once the project begins construction, around 5,000 people are expected to get employment opportunity. Nepal will receive 27 per cent free equity and 12 per cent free energy from Upper Karnali project.
Apart from that, Nepali suppliers of construction materials will also stand to benefit, according to the developer that had been given seven years to conclude the construction. The project must be handed over to the government after 25 years from the date of power commissioning, according to the PDA.
Despite all these positive developments, the project is facing a major roadblock from the Ministry of Forest and Soil Conservation as it recently introduced a new guideline ‘Utilisation of Forest Area by National Priority Projects’, which requires ‘land to land’ compensation for the utilisation of land in the forest area.
Earlier, the ministry was willing to provide 5,000 ropanis of government land for nominal lease fees and sought compensation for land area where permanent structures like dam, power house would be built. The developer is going to purchase 1,000 ropanis of private land in Dailekh and Achham districts.
On the other hand, as per the new forest rules, the developer needs to plant 25 saplings in another area of similar topography for chopping every tree for the project and nurture the saplings for five years.
The developer has complained about the recent stringent forest rules to the government. Private sector developers have also been urging the government to respect the PDA as a bilateral document and ensure policy stability for the development of the power sector.

PDA with Upper Trishuli soon: Energy Minister Sharma

The government is preparing to sign Project Development Agreement (PDA) with the promoters of the 216 MW Upper Trishuli-1 hydroelectricity project, according to energy minister Janardan Sharma.
Speaking at a forum 'Foreign Direct Investment in Hydropower' jointly organised by International Finance Corporation (IFC), Independent Power Producers’ Association of Nepal (IPPAN) and Nepal Water and Energy Development Company (NWEDC), in the capital today, Sharma said that the PDA for Upper Trishuli-1 will be signed soon.
According to a Energy Ministry, PDA negotiations between the ministry and NWEDC have reached final stages and that the agreement will be signed soon.
NWEDC is a joint venture company with stakes of three Korean companies – Korea South East Power Company (KOSEP), Daelim Industrial Corporation and Kyeryong Construction Industrial Corporation – the IFC and Bikesh Pradhanang, a Nepali investor. The run-of-river type project will generate 216MW electricity through three turbines of 72MW capacity each.
The hydropower project is expected to generate 1456.4 Gigawatt hours of net electricity per year, of which 1149.7 Gigawatt hours would be generated in the wet season and 306.7 Gigawatt hours would be generated in the dry season. The project site is near Dhunche, the headquarters of Rasuwa district.
It is high time for Nepal to attract FDI to exploit its rich water resources, Sharma said, adding that Nepal has both natural and human resources. "What we do not have is enough investment. Therefore, the importance for FDI is very high for Nepal."
Stating that Nepal has already signed a Power Trade Agreement (PTA) with India, a huge market for Nepal’s hydroelectricity, minister Sharma said this agreement is going to encourage FDI in Nepal’s hydropower sector.
Sharma went on to say that it takes years for hydropower promoters to get license and sign Power Purchase Agreement (PPA) and Power Development Agreement (PDA). "This does not encourage the foreign investors,” he added.
Similarly, director general of the Department of Industry Maheshwor Neupane, on the occasion, said that the government has a policy of prioritising the hydro sector for FDI. "FDI in hydropower sector has been increasing, though slowly," he added.
Stating that the Korean government has built fundamental industries and developed Korea’s economy through foreign loans and foreign direct investment, Korean ambassador to Nepal Choe Yong Jin said, “Nepal has one of the largest potentials in generating hydropower. "But such a great potential can only be materialised into reality through investment only," he said, "And this investment is possible through discussions with all the stakeholders and decisiveness and strong will of the leaders."
Envoy Jin expressed hope that the Upper Trishuli-1 Project, which is being developed by the international consortium NWEDC in collaboration with Korea South-East Power (KOSEP) and IFC, will make significant contribution to increasing total hydropower generation of Nepal.
Likewise, on the occasion, chief executive of KOSEP Heo Yup shared Korea’s FDI-funded development story. "Realising that borrowing foreign funds and inviting FDI were essential for infrastructure development, Korean government took various measures to protect foreign capital and, as a result, it attracted large amounts of foreign capital," he said, adding, "As a result, Korea was able to build a base for a sharp economic growth that surprised the whole world."
After 30 years of receiving FDI, he said, Korea became one of the top 10 exporting countries in the world, with its export volume of $2,000 billion. "Now, it is Korea who makes FDI in other countries."
Speaking at the programme, president of Independent Power Producers’ Association Nepal (IPPAN) Khadga Bahadur Bisht said that the policy makers of Nepal should seriously dwell on the FDI. "We have been seeking FDI since 1981. But there have been only a few hydro projects funded through FDI," he said, adding that Nepal hasn’t done well in terms of attracting FDI. "Nepal’s policy makers have to give priority to FDI."
A panel discussion was also held in the second session of the programme. The panel discussion chaired and moderated by former member of National Planning Commission (NPC) Dr Swarnim Wagle included energy secretary Suman Prasad Sharma, IPPAN president Khadga Bahadur Bisht, project manager of PPIB of Pakistan Iqbal Munawar, principal investment officer of IFC Kamal Dorabawila, USAID's energy policy and strategy advisor Michael Boyd as the panelist.

लगानी र रोजगारी चिन्तक

आफैं अर्थशास्त्री नभए पनि उनलाई देश विकासको लागि पहिला ठूलो लगानी चाहिन्छ भन्ने थाहा थियो। ठूलो लगानी र रोजगारी सिर्जना भयो भनेमात्र देशले आर्थिक विकासमा काँचुली फेर्न सक्छ भन्ने मान्यता राख्ने पूर्व प्रधानमन्त्री तथा नेपाली कांग्रेसका सभापति सुशील कोइरालाकोे २० महिने कार्यकालमा उनकै सक्रिय नेतृत्वमा संविधानसभामार्फत संविधान जारी भएको मात्र धेरैले सम्झन्छन्। नेपाली जनताले आफैंले संविधान बनाउन गरेको ६५ वर्षदेखिको संघर्षको प्रतिफलस्वरुप जारी भएका संविधानको कारण उनलाई सम्झनु स्वाभाविक पनि हो।तर, संविधान आएरमात्र हुन्न, जनताले त्यसको प्रतिफल पाउनुपर्छ भन्ने उनको सोच रहेको राष्ट्रिय योजना आयोगका पूर्वउपाध्यक्ष गोविन्द पोखरेल बताउँछन्। राष्ट्रिय योजना आयोगका अध्यक्ष प्रधानमन्त्री हुने प्रचलन अनुसार कोइराला पोखरेलका अध्यक्ष थिए।

धेरैले सरल जीवनशैली तथा प्रजातन्त्रप्रतिको एकोहोरो लगावका कारण कोइरालालाई सम्भि्कन्छन्। तर पोखरेलका अनुसार कोइरालाको व्यक्तित्वको अर्को महŒवपूर्ण विकासप्रेमी पाटो भने संविधानको चर्चामा छायाँमा पर्योा।

'देशलाई फाइदा हुने र रोजगारी सिर्जना हुने ठूला आयोजना बन्नुपर्छ भन्ने उहाँको मान्यताअनुसार विगत २० वर्षदेखि झुन्डिएर रहेको भारतसँगको ऊर्जा विकास सम्झौता (पिटिए) उहाँकै प्रधानमन्त्रीत्वकालमा भयो,' पोखरेल भन्छन्।

कोइरालालाई निर्णय लिने नसक्ने नेताको रुपमा धेरैलै चित्रित गरे पनि देश विकासको लागि भने उनकै नेतृत्वमा दुई अर्ब अमेरिकी डलर लाग्ने ९०० मेगावाटको माथिल्लो कर्णाली र सोही आकारको अरुण ३ को आयोजना विकास सम्झौता भयो।

'कोइरालालाई उपचारको लागि अमेरिका जानु थियो,' पोखरेल सम्झन्छन्, 'तर, उहाँले माथिल्लो कर्णालीको आयोजना विकास सम्झौता (पिडिए) गरेर जाने भन्दै सिंहदरबारमा आफ्नै अगाडि पिडिएमा हस्ताक्षर भएपछि सिधै विमानस्थल गएर अमेरिका उड्नुभयो।' यसबाट पनि कोइरालाको विकासप्रतिको लगाव र गम्भीरता प्रस्ट हुने पोखरेलको भनाइ छ।

२० वर्षदेखि अल्भि्कएर रहेको ५,६०० मेगावाटको पञ्चेश्वर बहुद्देश्यीय आयोजनाको काम पनि उनकै कार्यकालमा फेरि अगाडि बढेको थियो।

विकासबारे सबैका आ–आफ्ना धारणा वा शैली हुन्छन्, कोइरालाको पनि आफ्नै सोच थियो। पोखरेलका अनुसार प्रत्येक भेटमा कोइरालालाई लगानीबारे जानकारी गराउनु पर्थ्यो। हरेक भेटमा कोइरालाको एउटै प्रश्न गर्थे– देशमा लगानी ल्याउन र रोजगारी सिर्जना गर्न के हुँदैछ?

यस्तै, देशलाई कृषिप्रधान भन्ने तर किसानको लागि सरकारले कुनै सहुलियत नदिँदा भारतीय कृषि उत्पादनसँग प्रतिस्पर्धा गर्न नसकेर कृषि पेसाबाट किसान पलायन भइरहेको सन्दर्भमा कोइरालालाई कृषकलाई भारतमा झैं बिनाब्याजको ऋण दिन सकिन्छ कि सकिन्न भन्ने चिन्ता थियो।

बजारमा पानी र दूधको भाउ बराबर भएकोले किसान मर्कामा छन् भन्ने कोइरालालाई थाहा थियो। पोखरेलका अनुसार कोइरालाकै प्रयासमा ६ प्रतिशत ब्याजमा कृषिऋण दिने नीति ल्याइएको हो। कोइराला त बिनाब्याज कृषि ऋण दिनुपर्छ भन्ने मान्यता राख्थे। पोखरेल भन्छन्, 'तर प्राविधिकरुपमा यस्तो सम्भव नभएको कर्मचारीतन्त्रले बताएपछि ६ प्रतिशत ब्याजमा दिइने भएको हो।'

त्यस्तै, कृषिलाई अगाडि बढाउन रासायनिक मल उद्योग स्थापना गर्नुपर्नेमा पनि उनको धेरै चासो थियो। उनकै अध्यक्षतामा बसेको लगानी बोर्डको बैठकले रासायनिक मल उद्योग स्थापनाको लागि अध्ययन गर्न अनुमति दिइसकेको छ।

कोइरालाकै कार्यकालमा नेपालमा ठूलाठूला वैदेशिक लगानीका सिमेन्ट उद्योगका लागि अर्बौं डलरको प्रतिबद्धता आएको पूर्वअर्थमन्त्री तथा नेपाली कांंग्रेसका रामशरण महत बताउँछन्। उनका अनुसार कोइराला औद्योगिक वातावरण निर्माण गरी देशमा ठूलो लगानी भिœयाउन नीतिगत सुधारका पनि सहयोगी थिए।

लगानी बोर्डमार्फत ठूला विदेशी लगानी (एफडिआई) ल्याएर प्रविधि हस्तान्तरणमार्फत देशको विकास गर्नुपर्छ भन्ने उनको मान्यता थियो। यसको लागि नीतिगत सुधार गर्नुपर्नेमा कोइरालाले आफूलाई पूरापूर साथ दिएको महतको भनाइ छ।

यस्तै, कोइरालाको प्रजातन्त्रप्रतिको अटल आस्थाका कारण नेपालका विकास साझेदारहरु पनि उनको कार्यकालमा नेपालमा प्रजातन्त्र र विकासको वातावरण बन्नेमा ढुक्क देखिन्थे। कोइराला कार्यकालको पहिलो आर्थिक वर्षमा नेपालले दुई खर्ब ७० अर्ब २० करोड बराबरको वैदेशिक सहायताको प्रतिबद्धता पाएको थियो। तर, दोस्रो आर्थिक वर्ष सुरु हुनु दुई महिनाअघि वैशाख १२ मा विनाशकारी भुइँचालो गइदियो।

प्रधानमन्त्रीको रुपमा कोइरालाको २० महिने कार्यकालको लगभग अन्तिममा गएको ठूलो भूकम्पले पनि कोइरालालाई अडानबाट हल्लाउन सकेन। कोइरालाकै सहज नेतृत्वको कारण नेपालले वैशाख १२ को भूकम्पपछिको क्षति आंकलन तथा त्यसकै आधारमा पुनर्निर्माणको लागि काठमाडौंमा अन्तर्राष्ट्रिय सम्मेलन गरेर विकास साझेदारबाट चार खर्बभन्दा बढीको प्रतिबद्धता प्राप्त गर्न सफल भएको महत सम्झन्छन्।

यस्तै, मितव्ययितामा पनि कोइराला उत्तिकै चासो राख्थे। संविधान आउला, स्थिरता होला, अनि राजदूत नियुक्त गरौंला भन्ने उनको सोच रहेको पोखरेल बताउँछन्। हाललाई भारत, अमेरिका, युरोप तथा चीनमा राजदूत भए पुग्छ, किन बढी खर्च गर्ने भन्ने उनको सोच अन्य प्रधानमन्त्रीको आफू नियुक्त हुनेबित्तिकै आफ्ना कार्यकर्ता भर्ना सुरु गरिहाल्ने प्रवृत्तिभन्दा फरक थियो। किनकि कोइराला फाल्तु खर्चलाई सकेसम्म निरुत्साहित गर्थे।

नेपाल राष्ट्र बैंकका गभर्नर चिरञ्जीवी नेपालका अनुसार बिपीको आर्थिक विचारबाट प्रभावित सुशीललाई आर्थिक कुरा बुझाउन निक्कै सजिलो थियो। गभर्नर नेपाल कोइराला प्रधानमन्त्री हुँदा उनका आर्थिक सल्लाहकार थिए।

यसरी निजी क्षेत्रलाई माया गर्ने र खुला बजार अर्थतन्त्रले नै देशको विकास गर्न सकिन्छ भन्ने मान्यता राख्ने कोइराला व्यक्तिको आर्थिक स्वतन्त्रताका पक्षपाती थिए। नेपालका अनुसार कोइराला व्यक्तिलाई पैसा कमाउन दिनुपर्छ भन्ने मान्यता राख्थे। कोइराला व्यक्तिले काम गरेर पैसा कमाएर रोजगारी सिर्जना गरोस्, राज्यलाई कर तिरोस् भन्ने मान्यता राख्थे।

कसैले नयाँ लगानीका कुरा गरे उनको पहिलो प्रश्न 'कतिजनाले रोजगारी पाउँछ' भन्ने हुन्थ्यो।

आफूले बोकेको विचार र जीवनशैलीमा ठूलो विरोधाभाष रहेको समूहले देश विकासलाई नै पहिलो प्राथमिकता मान्ने कोइरालाजस्ता स्वच्छ छविका देशभक्त नेतालाई मर्ने बेलामा विभिन्न आरोप पनि लगाए पनि प्रजातन्त्र, खुला बजार र आर्थिक स्वतन्त्रताप्रति कोइरालाको निष्ठा युगयुगसम्म अमर रहने पोखरेल बताउँंछन्।

साम्यवाद स्थापनाको लागि सर्वहाराको नाममा जीवनभर लडेका नेताको जीवनशैली सत्ताको केन्द्र वरिपरि पुग्नासाथ कुनै जमिनदार वा खानदानी राजशाही भन्दा फरक छैन। नेपालका वामपन्थी भनिने नेताकै जीवनशैली उनीहरुले आक्षेप लगाउने पुँजीपतिको भन्दा कम छैन। तर, कोइरालाले आफ्नो सबै सम्पत्ति पार्टीलाई दान गरेरमात्र चित्त बुझाएनन् जीवनभर प्रजातन्त्र मात्र सोचे।

उनको जीवनशैली अनुकरण गर्न सक्ने नेता नेपालले फेरि नपाउन सक्छ। कोइराला महिलाको सामाजिक सुरक्षा तथा विकासबारे पनि चिन्तित थिए। उनले आफ्नो प्रधानमन्त्रीत्वकालमा तराईका २० जिल्लाका मधेसी, जनजाति, पिछडिएका महिलाको लागि नेपाली कांग्रेसका पुराना नेता रामनारायण मिश्रको नाममा छात्रवृत्ति स्थापना गरे।

तैपनि कोइलालाका धेरै राम्रा काम छायाँमा पर्योम। आफैंले संविधान लेख्ने नेपाली जनताको ६५ वर्ष पुरानो सपना पूरा गर्दा कोइरालाका अरु राम्रा कामलाई गौण ठानियो। कामै नगरी प्रचारवाजी गर्ने कार्यशैलीप्रति सादगीका पर्याय कोइरालाले कहिल्यै विश्वास गरेनन्।

Chinese company to develop 750-MW West Seti

A meeting of Investment Board Nepal chaired by Prime Minister Sushil Koirala today approved investment from a Chinese company to develop the 750-megawatt West Seti Hydropower Project.
The project that is estimated to cost Rs 160 billion will now be developed by a joint venture with Nepal Electricity Authority (NEA) and CWE Investment Corporation, a subsidiary of China’s Three Gorges Corporation (TGC). The state power utility, NEA will have 25 per cent in equity, and CWEI will inject investment for the equity and borrow the remaining amount.
The joint venture will conduct geological tests before monsoon for the mega hydropower
project that is going to be constructed in Baitadi, Bajura, Dadeldhura and Doti districts of Far Wester Region, according to the chief executive officer of the Board Radhesh Pant.
Soon after completion of geological and hydrological tests, we will begin negotiations on Project Development Agreement (PDA) with the Chinese company,” he said, adding that the project will start generating power in 2023, if everything goes according to the plan.
Earlier in August 2012, the government had formally handed over the West Seti hydropower project – that was then aimed at domestic consumption – to the CWEI, after a memorandum of understanding was signed between the company and the Board. The board – that looks after mega projects – had then started preliminary negotiation with the project developer. But the NEA was hesitant to seal the deal as it was worried of power surplus by 2017 – as more power producers are generating power lately – whereas the Chinese developer was also not sure of the market, in case of power surplus in Nepal. The state power utility is the sole buyer of electricity developed by all the developers.
However, after Nepal-India Power Trade Agreement (PTA) recently, NEA and the Chinese developer, came near to agreement. The PTA allows both Nepal and India to buy and sell electricity.
The 750-MW project also got back on leak after the visit – in March end – of China Three Gorges Corporation chairman Lu Chun, who met with the premier Koirala to discuss the issues of resettlement and rehabilitation of the displaced families by the project.
The Board has also decided to charge $1,500 per MW in negotiation fee for Power Development Agreement (PDA) as the project is not handed through open bidding like Upper Karnali and Arun III. The developer has to pay the fee either the negotiations become successful or unsuccessful. A seven-member team has been formed under Pant for the negotiation.
The project was envisioned some two decades ago as Snowy Mountain Engineering Corporation (SMEC) had shown interest in developing the project. The first study was also conducted in 1987. The government was however forced to revoke the licence of the Australian company as it failed to start work after repeated renewal.
Meanwhile, the Board also decided to amend the project negotiation agreement for Tamakoshi III hydropower project. The chief executive is authorised for the amendment. It has also decided to form an expert committee to review the amendment.

IFC, GMR Group partner for power projects to unlock hydro potential and promote growth

International Finance Corporation (IFC) – a member of the World Bank Group – has partnered with India’s GMR Group to develop the 900 MW Upper Karnali hydropower plant, and two transmission line projects in Nepal.
The projects will meet energy demands and create jobs in Nepal and the South Asia region.
The transmission projects will evacuate power from the Upper Karnali and 600 MW Upper Marsyangdi Hydropower projects in Nepal. IFC InfraVentures – a global infrastructure project development fund – is a co-developer of these projects. IFC will make investments for project development and help achieve financial closure for these projects, which have a total investment outlay of $1.7 billion. The Upper Karnali plant will create over 3,000 jobs and help reduce greenhouse gas emissions of nearly two million tonnes of carbon dioxide equivalent annually.
According to the joint development agreement, 12 per cent of the power generated from the Upper Karnali project will be provided free of cost to Nepal.
"This is the very first project for which the Project Development Agreement (PDA) was executed by the Investment Board,” said chief executive officer of Investment Board of Nepal Radhesh Pant. "IFC's expertise in the international financial markets brings complementarity and synergy to GMR's strengths in regional infrastructure," he said, adding that IFC's involvement will help the project achieve timely financial closure, construction, and operational milestones.
"IFC’s financing and global expertise in the hydro sector will help the projects become a game changer for Nepal’s hydropower sector and will attract international investors,” said group chairman of GMR Group G M Rao. "The development of these projects complements the initiatives taken by India and Nepal to establish high-capacity cross-border transmission links to facilitate power trading between the two countries," he added.
Nepal has significant hydropower potential but less than one per cent of it is developed. Only an estimated 46 per cent of the population has access to electricity. Over the last decade, demand for power in Nepal has grown at nine  per cent annually, while supply has not kept pace.
“Hydropower is a powerful engine for economic growth in Nepal,” said IFC director for Asia Pacific Vivek Pathak. "These projects will boost a common energy market in South Asia, create sustainable employment, improve quality of life, and provide reliable and clean energy for local industry," he added.
Nepal is a priority country for IFC.
Since 2008, IFC has been working closely with Nepal's private sector through investments and advisory services. IFC has been working in developing infrastructure, tourism, financial markets, transportation, and trade finance in the country. In recent years, IFC has also been assisting the government to make doing business easier.

SAARC nations ink power deal opening regional trade

South Asian countries today signed a last-minute deal to trade electricity among themselves opening opportunities for development of hydropower projects in Nepal.
Before the SAARC summit concluded here in Kathmandu, foreign ministers of all the eight countries signed the SAARC Framework Agreement on Energy Cooperation and Electricity Trade that will boost the investment and trade, apart from a greater regional connectivity.
The deal will also ensure electricity trading through grid connectivity.
Howver, the eight countries failed to sign two pacts – one on motor vehicle and another on railways – that could have increased intra-regional connectivity to fuel trade in the South Asia.
SAARC Energy Center – based in Islamabad of Pakistan had long been doing groundwork – and SAARC energy ministers had finalised the draft framework agreement at a meeting in New Delhi on October 16-17.
The framework provisions South Asian governments to enable their agencies for grid connectivity, policy harmonisation and trading as well as facilitating the supply of electricity to power-deficit cities
The framework agreement comes into effect from today.
After the signing of the agreement of the concluding session, SAARC chair and Prime Minister Sushil Koirala announced that the two pacts which will boost connectivity and encourage people-to-people contact and movement of goods will be approved within three months.
At the end of the two-day 18th SAARC summit – which took place after three years, a 'Kathmandu Declaration' was also adopted. The 'Kathmandu Declaration' recognised that after nearly 30 years of its existence, it was time to "reinvigorate' SAARC's regional cooperation and 'revitalise' the bloc as an effective vehicle to fulfill the developmental aspirations of the people in the region.
The summit declaration also identified trade as a key area with leaders renewing their commitment to achieve South Asian Economic Union in a phase-wise and planned manner through a free trade area, a customs union, a common market, and a common economic and monetary union.
The declaration said the leaders unequivocally condemned terrorism and violent extremism in all its forms and manifestations and underlined the need for effective cooperation among the member states to combat them. The SAARC leaders also directed respective authorities to ensure full and effective implementation of the SAARC Regional Convention on Suppression of Terrorism.
Koirala also declared that the 19th SAARC Summit will be held in Islamabad of Pakistan in 2016.
The SAARC member countries – Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka – host the summit alphabetically every year, though it has been held in three years this time. The two-day SAARC Summit – started yesterday – was attended by Presidents of Afghanistan, Sri Lanka, the Maldives, and Prime Ministers of India, Pakistan, Bangladesh, Nepal and Bhutan.


Nepal to benefit
KATHMANDU: Nepal will benefit from the energy agreements among the SAARC nations. Currently, some Indian companies are giving special interest to invest in the energy sector in Nepal, but Bangladesh has also shown in joint investment in hydropower in Nepal to meet its increasing energy demand.
Investment Board of Nepal has recently signed agreements of 900-MW each Upper Karnali and Arun III hydropower projects.
According to the agreements, Nepal will get 306-MW power free of cost. Nepal will also get free shares of the Upper Karnali and Arun-III. The Arun III is going to Rs 1 billion worth shares to locals, while the country will get 27 per cent share of the Upper Karnali.
Likewise, the government is planning to invest Rs 100 billion soft loan from India in Budhigandaki Hydropower.
These projects will not only help Nepal reduce ballooning trade deficit with India, but also help meet rising energy demand in India.
Currently, India has been providing electricity to Bangladesh. India has also promised Pakistan and Afghanistan to provide 1,000 MW each soon. However, India is a net buyer of power from Bhutan, currently, as India has already signed bilateral energy trading agreements with Bangladesh and Bhutan.
September's Nepal-India Power Trade Agreement (PTA) has opened door to sell the electricity produced in Nepal to Bangladesh. But the SAARC framework agreement has expanded the opportunity to regional level.
Similarly, World bank is helping construction of Dhalkebar-Muzaffarpur Transmission Line that will help cross border connectivity. Some 1,400 MW of power can be exported and imported through the transmission line.

Investment Board to approve Rs 25 billion cement factory

Investment Board of Nepal is going to approve Rs 25 billion cement factory.
The board meeting after the Tihar festival is going to approve India's Reliance Industries' Rs 25 billion cement factory for foreign direct investment, informed external affairs head of the board Ghanashyam Ojha.
The board – chaired by the Prime Minister Sushil Koirala – has received the proposal from the Reliance Industries that is owned by India's Ambani group, he said, adding that the company is planning to set up the cement factory in either the central region or the eastern region of the country. "The Department of Mines and Geology has already given its permission to the factory in mid-July."
The approval got delayed due to the board's busy schedule with the project development agreement (PDA) on Upper Karnali Hydropower Project with another Indian firm GMR.
After the board's approval – post Tihar festival that ends on October 25 – Reliance will conduct environmental impact assessment (EIA). The company will then submit the EIA report to the board, through Ministry of Environment.
After the clearance of the EIA from the board, Reliance will start the work to set up the factory, Ojha added.
Reliance has, however, demanded that the government provide 60 MW of uninterrupted supply of electricity to the factory, he said, adding that the company has demanded that it should be provided subsidy in the import of coal or other fuel for generating electricity, in case the government is unable to provide uninterrupted supply of electricity.
More cement companies both domestic and foreign investment are coming up lately as the demand for cement has increased due to construction of big infrastructure projects including hydropower projects lately.
The government – to encourage the cement industries – promised to provide access road and electricity to new cement factories. According to Trade and Exports Promotion Center (TEPC), import of cement has gone down by 19.2 per cent to Rs 3.18 billion in the fiscal year 2013-14 compared to a fiscal year ago in 2012-13, when the country saw Rs 3.94 billion worth cement import. But the country has seen rise in import of clinker as most of the domestic cement factories are dependent on imported raw material for cement that is clinker. Only few of the cement factories rely on domestic mines and majority of them have been importing clinkers.
According to central bank, in the fiscal year 2013-14, the country imported Rs 9.71 billion worth cement and clinkers that is some three per cent higher than that of a fiscal year ago in 2012-13, when the country imported Rs 9.42 billion worth cement and clinkers.

Investment Board of Nepal, GMR sign PDA for Upper Karnali

Investment Board of Nepal and Indian company Grandhi Mallikarjuna Rao (GMR) Energy today signed Project Development Agreement (PDA) for construction of the $1.5 billion Upper Karnali Hydropower Project in western Nepal.

Investment Board of Nepal chief executive officer Radhesh Pant, president of Hydro Energy Business Unit of GMR RV Seshan and Nepal chief Harvinder Manocha signed the agreement after six years of signing of memorandum of understanding between Nepal government and India’s GMR-ITD Consortium.

The Project Development Agreement is expected to open a door for the Indian company to move ahead for financial close and construction of the 900 megawatt Upper Karnali Hydropower Project.

According to the PDA, Nepal will get 27 per cent free equity and 12 per cent (108 MW) free electricity from the project. Likewise, the agreement also ensured handover of the project, along with the 100-km transmission line, to the government after 25 years of operation.

GMR is planning to sell the remaining 88 per cent energy to India, Bangladesh and Nepal. However, the price will depend on the final project cost and the situation of demand and supply in the market on completion of the 900 MW hydel project.

Likewise, GMR will also construct a 2-MW project that will supply electricity round the year to locals. More than 2,000 people are expected to get employment opportunity from the project estimated to cost Rs 145 billion.

The project will bring road connectivity, hospital, technical school and bridge in the district.

Prime Minister Sushil Koirala, some of his cabinet colleagues, senior government officials, visiting Indian home minister Rajnath Singh and ambassador to Nepal Ranjit Rae were present at the signing ceremony at Singha Durbar in Kathmandu, on the occasion.

The agreement will be implemented with immediate effect, said deputy prime minister and home minister Bam Dev Gautam, after signing of the agreement.

"The agreement has opened the door for developing other large hydropower projects in Nepal," he added.

Likewise, wishing timely completion of the project visiting Indian home minister Singh termed the agreement a 'historic' one. "I believe this is the single biggest foreign investment in the history of Nepal," he said, adding that the success of GMR in Nepal will ensure credibility of both the company and India both.

The Investment Board of Nepal had been working hard on PDA negotiation with GMR since last June. But according to Pant, serious negotiations actually began last September. "Today's PDA agreement is the outcome of several rounds of discussions with stakeholders and has addressed issues raised by them," he said, adding that the board has prepared the PDA document according to the international norms and standards and good practices. Pant also said Nepal can buy energy at competitive market rates from the export-oriented project.

"GMR Group will mobilise 25 per cent equity capital while the remaining 75 per cent will be raised from international lenders including International Finance Corporation (IFC)," Seshan said, after signing the agreement.

There will not be any problem in raising prerequisite equity and debt capital to execute the project,” he said, adding that the GMR was confident of completing the financial closure within two years, according to the PDA. "We will implement the project within the next five years."

However, construction of re-regulating dam by GMR is yet to be finalised.

"The decision will be taken based on the consultation with Nepal government once the joint study team submits its report,” Seshan added.

According to the PDA, the Indian developer will have to build the re-regulating dam on its own, if the study report shows Upper Karnali will impact water flow for downstream irrigation project. Construction of the re-regulating dam was suggested by an independent study team has been included in the PDA document after experts and Irrigation Ministry drew attention to the matter, saying the hydropower project would affect irrigation projects.

Likewise, planning commission vice chair Dr Govind Raj Pokharel, who led the technical team to study the PDA, hoped that the PDA signing would be a first step towards the prosperity of Nepal. "It will also send message of an improved investment climate in the country," he added.

The Cabinet has approved the PDA yesterday after the Investment Board of Nepal approved the amended PDA draft a day ago on Thursday.

The government yesterday also formed a high-level task force led by Dr Pokharel for the implementation of the project that is planned to be generate power by 2021. The panel will help address problems arising during project development.

The 900-MW Upper Karnali Hydro Power project – located on Karnali river in the Surkhet, Dailekh and Achham districts – was awarded to the GMR Group through an International competitive bidding process in 2008 on BOOT model.

GMR signs joint development accord for hydropower in Nepal with IFC

GMR Energy Ltd – the energy arm of the GMR Group of India – today signed a Joint Development Agreement (JDA) with the International Finance Corporation (IFC) – a member of the World Bank Group – to jointly develop the prestigious Upper Marsyangdi-2 hydropower project (600 MW) in Nepal.

The 600 MW Upper Marsyangdi-2 Project is located on the Marsyangdi River, in the Manang and Lamjung districts, which is already in an advanced stage of development.

"We are pleased to have IFC as our partners in the Upper Marsyangdi-2 Hydropower project," chairman of Energy Business GBS Raju said, after signing the agreement.

Raju and chief executive -Hydro business of GMR Group G Subba Rao graced the signing ceremony today.

"Apart from investing in the company, IFC will also bring its vast experience in financing similar large and complex Infrastructure Projects, which will add value to the Project," her said, adding that they believe that with the continuous support of IBN, both GMR and IFC shall be able to implement this project in an accelerated manner.

IFC Infrastructure Director for Asia Anita George, on the occasion said that Nepali citizens and industry face severe electricity shortages. "The development of hydropower is a sustainable and responsible way to address this need while creating jobs and other benefits for the community," she added.

"Nepal is pleased at the induction of an Institution like IFC in the Upper Marsyangdi-2 Project and we are hopeful that GMR and IFC teams shall be able to give Nepal the much needed impetus to large scale hydropower development through development of this project in a world class manner," Speaking on the occasion, chief executive of Investment Board of Nepal Radhesh Pant said.

The project aims at a total investment of around $1 billion and is targeted for commissioning by fiscal year 2021.

The Project is being currently undertaken through a Nepali subsidiary of GMR Energy Ltd, Himtal Hydropower Company.

The government has identified the proposed Upper Marsyangdi-II as one of the national priority projects and is being facilitated by the Investment Board of Nepal.

The project has completed all survey and investigation works, finalised the feasibility studies and has already received majority of the clearances from government. The Project Development Agreement (PDA) is expected to be signed early next year.

IFC in Nepal is committed to strengthening private sector growth, promoting a supportive regulatory framework, boosting investment, particularly in infrastructure and financial sector, and creating more jobs in the country.

GMR Group – an infrastructure major, with interests in energy, airports and highways sectors in India and worldwide – is a Bangalore (India) headquartered global infrastructure major with interests in airports, energy, highways and urban infrastructure sectors. It has successfully employed the public-private partnership (PPP) model to build a portfolio of high quality assets. The Group has 15 power generation assets of which eight are operational and seven are under various stages of development and eight road assets, of which seven are operational and one is under construction.