GMR signs agreement with Nepal for 900 Mw project

This is GMR Group's largest overseas investment till date

GMR Group today announced the signing of project development agreement (PDA) for the 900 Mw Upper Karnali Hydro Power Project with the Government of Nepal on September 19, 2014.

This is the largest FDI for Nepal and also the largest investment for GMR Group outside India, the company said in a filing to BSE.

The Upper Karnali Hydro Power Project was awarded to the GMR Group through an international competitive bidding process in 2008 on BOOT basis. The Project is being developed as an export oriented project, to be constructed over a period of 5 years.

The Project is located on Karnali river, in the Surkhet, Dailekh and Achham districts of Nepal. The power generated, net of Free Power and power supply to Nepal, if any, is planned to be evacuated through a 400 Kv double circuit transmission line up to the interconnection point of Power Grid Corporation of India (PGCIL), in India.

The financial closure of the project (long term tie up of debt and equity capital) is expected to be achieved by September 2016 and thereafter the commencement of the commercial operation is expected by September 2021.

Continuing with its asset light asset right (ALAR) strategy, GMR Group will be exploring strategic / long term capital tie up of both debt and equity for the project at an appropriate time.

The project is expected to generate about 3,500 million units of energy annually and 420 MUs of energy (12% of installed capacity) has been earmarked as free power to Nepal. The Nepal Electricity Authority will hold 27 per cent free equity stake in the project including all project royalties and the 100% ownership of the

project will be transferred to the Government of Nepal, at the end of the 25 year concession period.