KATHMANDU, June 28: Nepal has formally sought financing for Tamakoshi V Hydropower Project from Asian Infrastructure Investment Bank (AIIB).
The project is designed to be developed at the tail end of the under-construction Upper Tamakoshi Hydropower Project.
Ministry for Finance has proposed the 101-megawatt project as well as two others for financing of the Asian Infrastructure Investment Bank (AIIB) last week. During AIIB’s third annual meeting held in Mumbai on Monday and Tuesday, Minister for Finance Yuba Raj Khatiwada sought the regional development bank’s assistance to build the project.
Responding to Khatiwada’s proposal, AIIB President Jin Liqun assured the Nepali team that AIIB will soon study Nepal’s proposal and assess the project’s viability before taking decision on the proposal, a statement issued by the Ministry of Finance on Wednesday said.
In a separate meeting with Secretary of Ministry of Finance, Shishir Dhungana, AIIB Vice President D J Pandian said that they were positive about investing in Tamakoshi V.
This project financing will be first of its kind in Nepal by the institution established with the aim of supporting infrastructure development in the region. The China-led bank, which was set up in 2015, has a capital of US$ 100 billion. It is widely perceived as a rival to the US-led World Bank.
Tamakoshi V needs an investment of Rs 15 billion (approximately $150 million) and Nepal Electricity Authority has already instituted a separate entity for executing the project. It will harness hydropower in the same way like Upper Tamakoshi i.e. storing water for up to six hours before starting generation. This means the project can operate in full capacity for six hours during peak hours like the Upper Tamakoshi project. This feature makes the project attractive for investment. Further, there is no need to build transmission lines.
The other two projects that Nepal has tabled for AIIB financing are strengthening power distribution system in mid and western Nepal, and an integrated urban development project.
Strengthening power distribution system, which is estimated to cost Rs 10 billion, incorporates upgrading the selected power supply facilities in those two regions.
Joint Secretary of Ministry of Finance Shrikrishna Nepal and AIIB Vice President Joachim Von Amsberg signed an agreement of technical assistance worth $1 million for preparing the project before going for implementation.
Likewise, building roads, sewage system and other utilities in seven cities in tarai region are the works under integrated urban development project which is estimated to cost Rs 11 billion.
Talking to Republica, Under-Secretary of Ministry of Finance, Yug Raj Pande, said that the government hopes to sign investment agreements for these projects totaling over Rs 35 billion in the next one and half years.
Speaking at the meeting in Mumbai, Minister for Finance Khatiwada said that Nepal will also table other infrastructure projects, including railway, several fast track highways, tourism infrastructure projects and mega hydropower projects in the coming days.