Indian infrastructure company GMR will develop the
Upper Karnali Hydel Project in Nepal, and is a significant investment for
Nepal, which will export energy to India.
Investment Board Nepal (IBN) signed a project development
agreement (PDA) with India based GMR on Friday, September 19, to develop the
Upper Karnali Hydel Project. The Upper Karnali project is estimated to product
900MW of hydel energy, and it is believed to give relief to Nepal
regarding acute power shortage. It took six years to ink this agreement
after GMR signed a memorandum of understanding (MoU) with the Nepal government.
Radhesh Pant, CEO of IBN, and RV Seshan, president of Hydro
Energy Business Unit of GMR, signed the agreement at Kathmandu, Nepal. This
agreement is a key that will open the door to the arrangement of financial requirements
for the project.
After the visit of the Indian Prime Minister, this agenda
was taken seriously from both sides, and the agreement was concluded. Nepali
Prime Minister Sushil Koirala along with cabinet ministers, high designated
government ministers, Indian Home Minister Rajnath Singh and Ranjit Rae, and
Indian Ambassador to Nepal were present in Singha Durbar, Kathmandu where the
agreement was signed.
“This agreement will be a break-through in the development
of mega hydro-projects in Nepal and this agreement will be implemented with
high priority,” said Bam Dev Gautam, Deputy Prime Minister and Home Minister of
Nepal. Indian Home Minister Singh said that the Indian government is very
happy with this ‘historic’ agreement. He added, “this is the single biggest
foreign investment in Nepal and GMR will prove its credibility by completing
the project on stipulated time.”
“After series of serious talks with stakeholders and
addressing their issues, the PDA document was produced,” said IBM CEO Pant. “The
document is prepared following all the international standards, norms and good
practices,” added Pant.
This project is expected to be constructed with 25% equity
and 75% debt from international lenders. GMR has to complete its financial
closure within two years. Seshan showed his confidence on raising capital
without any hassles. This PDA was concluded after the Indian side agreed to
build the re-regulating dam on its own, the absence of which will affect the
irrigation projects downstream of the hydro project.
Upon successful implementation of this agreement and
completion of the 1.5 billion dollar project, Nepal will get 27% free equity
stake and 108MW electricity for free while rest of the energy is exported to
India.
Nepal will gain the ownership of the project along with its
100 kilometre transmission line after 25 years of operation. As per the
agreement, GMR will have to build another 2MW project to provide electricity to
the local communities. This project will provide jobs to more than 2000 people while
the locals will benefit from the construction of roads, schools, hospitals and
other infrastructures by the project.
The project was awarded to GMR after the company placed the
lowest bid in the open bidding in 2008.
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