Modi's $1-bn facility to help Indian infra cos in Nepal

GMR, Tata Power, Jindal Power and SJVN have already bid to set up projects in Nepal, which has potential to develop 42,000 Mw of hydro power

The central government’s offer to Nepal of $1 billion in concessional loans to help build power plants and roads  will be a big help to Indian infrastructure companies.

Some of India’s biggest infra companies, such as GMR, Tata Power, Jindal Power and government-owned SJVN have already bid to set up projects in Nepal, which has the potential to develop 42,000 Mw of hydro power, of which it has done only 600 Mw.

“The biggest competitor is China… though India is the biggest investor till date in Nepal, this is changing fast with Chinese companies setting up a lot of power projects,” said the chief executive of a Mumbai-based infrastructure company, asking not to be named. For the Indian companies, to raise funds for the hydro projects was a big obstacle, and with the new loan facility from the government, it will be much easier to set up projects there. Most of the power generated from these new projects is to be sold to power-starved North India.

In recent years, the hydro power sector has emerged as an attractive sector for Indian investments.

The government of Nepal has issued 28 survey licences for hydro power projects having generation capacity of 8,249 Mw to Indian companies and joint ventures.

Indian companies account for close to half of all foreign direct investment proposals approved in Nepal, according to our embassy there.

Analysts also say consumer product companies ITC and Dabur have done very well in Nepal, with annual revenue of Rs 1,226 crore and Rs 542 crore, respectively, from there last year (see chart).

“Nepal will continue to be a focus area for consumer product companies, as the culture of India and Nepal are almost similar,” said an analyst.

A Marico official said on Monday that expansion in the adjacent growing markets such as Nepal, Pakistan, Cambodia, Myanmar and Sri Lanka is expected to contribute up to Rs 100 crore by next year to their revenue.

In recent years, hydro power sector has emerged as an attractive sector for Indian investments. Government of Nepal has issued 28 survey licenses for hydropower projects in Nepal having generation capacity of 8,249 MW to Indian companies, joint ventures.

Apart from infrastructure projects, some large Indian investors include Tata Communications, State Bank of India, Punjab National Bank, LIC, IL&FS and the Manipal Group ? which has set up a University.