IFC pledges 25% loan finance to hydropower project

The combined cost of the two medium-sized projects that would generate altogether 702 Mw power is estimated at $1.5 billion, for which IFC would provide 25 per cent loan, according to the Ministry of Water Resources sources.     

India's GMR Energy Ltd has got the contract to work on the Arun-III (402 Mw) project whereas Sutlaj Vidyut Nigam has bagged the 300 Mw Upper Karnali project.     

 

The Nepal government had awarded survey license of the Upper Karnali to GMR last January and that of the Arun-III project to Sutlaj this year. After completing Detailed Engineering Survey, the government will award generation license to these two Indian companies.     

The construction cost for Arun III and Upper Karnali is $1 billion and $500 million respectively.     

Besides royalties to the government, Nepal Electricity Authority will get 27 per cent free equity share from the Upper Karnali and from Arun III the government will get 12 per cent free power.     

IFC, a World Bank affiliated group, has already invested 10 per cent of the total investment in Khimti and Bhotekoshi Hydropower projects.

IFCs Director, Infrastructure, Anita George suggested that Nepal should give priority to small and medium-sized projects and that IFC would also prefer financing such projects.     

"We are looking for medium and small-size projects but we will finance large projects as well," she said.