Nepal inks financial closure of its largest hydropower project with India

India and Nepal on Thursday inked financial closure of Nepal's largest hydropower project, the Arun-III being built with India's assistance. India has pledged an investment of NPR 100 Billion for the 900 MW mega hydropower project being built in Nepal's Sankhuwasabha District.

The project has set the record for the largest Foreign direct investment (FDI) to the Himalayan nation. Two Nepali banks and five Indian banks have committed to lend debts for construction of the mega power project.

"Two banks from Nepal, Everest Bank and Nabil Bank, have come forward to participate as a lender for the requirement of this project to arrange this NPR 7800 Crore for the debt of financing Arun- III project," said Nand Lal Sharma, Chairman and Managing Director of the Satluj Jal Vidyut Nigam (SJVN).

"Five Indian Banks- State Bank of India, Punjab National Bank, CANARA Bank, Axim Bank and Union Bank of India they also are participating in lending funds for the construction of this project," he added.

Everest Bank and NABIL Bank from Nepal agreed to provide debt of 1536 Crore (NPR) for the project whereas five Indian Banks- State Bank of India, Punjab National Bank, Axim Bank, and UBI have pledged 8598 Crore (NPR) for the same.

Anil Keshari Shah, CEO of Nabil Bank who will be lending on debt for the project claimed the project would crater and give a new experience that can be utilized in future.

"Financial Closure does not just mean signing a cheque and giving them money. It also means on the ground support which Everest Bank and Nabil Bank can give them as the project is in Nepal," said Shah.

With financial closure, the National pride project of the Himalayan nation is expected to get momentum. The Project Development Agreement (PDA) for construction of the project was signed between SAPDC and Investment Board of Nepal on 25th November 2014.

The estimated cost of the project to be completed within five years stands at USD 1.04 which would produce 4,018.87 million units of electricity a year.

The project is expected to generate 3,000 jobs during construction in India and Nepal together.