Visiting Vice President of Asian Development Bank (ADB) Zhao Xiaoyu expressed the bank´s readiness to own 15 percent equity shares in the project, during a meeting with Prime Minister Madhav Nepal on Wednesday. The bank had initially agreed to own 15 percent shares in the project but had remained mum on the issue later. According to PM´s advisor Rajan Bhattarai, Zhao told the prime minister that ADB´s earlier commitment to invest in the project is still on. [break]
It was said that ADB was half-hearted to the Rs 120 billion project to be built in Doti and Dadeldhura districts in the far-western Nepal, doubting the financial viability of the project. Right after the CMEC and West Seti Hydro Ltd (WSHL) signed an MoU in Beijing on December 28, 2009, director of WHSL Himalaya Bahadur Pande had told the media through a video conference from Beijing that ADB had refused to invest in the project.
Due to the ADB´s lack of interest, the project was not making any progress towards financial closure. Xiaoyu had also met Energy Minister Prakash Sharan Mahat and reiterated ADB´s commitment to the project. After the ADB´s revived interest, the hopes for the realization of the country´s largest storage project have gone up, a source at WSHL told myrepublica.com.
Australian Company Snowy Mountain Engineering Corporation (SMEC), which has 26 % equity shares in WSHL, had been busy in searching prospective equity partner. SMEC is said to be ready to lower its shares after CIMEC signed MoU to have 51 % shares.
It has been said that WSHL is likely to sign an agreement with CMEC in the first week of February, 2010. According to a WSHL official, Pande is now in Beijing to prepare for the agreement with CMEC. Due to the delay in financial arrangement, the project has been delayed by some 12 years since its conception. The project is designed in such a way that 90 percent of the energy produced from it would be exported to India and 10 %(75MW) would be utilized in Nepal.
Equity structure may change
In the changed context of CMEC´s commitment for 51 % equity, the share structure of the stakeholders is going to be changed in WSHL, according to an official at WSHL. Initially, it was agreed that the government would have 15 % equity in the project, Indian company Infrastructure Leasing and Financial Services (IL&FS) 15%, ADB 15%, SMEC 26 %, CMEC 15 % and Nepali financial institutions 14 percent.
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