KATHMANDU, June 11: The Asian Infrastructure Investment Bank (AIIB) has approved a loan of up to US $ 90 million for the 216 MW Upper Trishuli-1 Hydropower Project, which is being developed by a Korean joint venture company. The approval was made by the board of directors of AIIB on Monday. A press statement issued by the bank said Nepal's power generation will increase by almost 20 percent with the completion of the project.
The project, whose estimated cost is US$ 650 million, will be financed entirely through foreign capital. Besides AIIB, the project has other co-funders including the International Finance Corporation, Asian Development Bank and other development institutions. The project is to be developed under build-own-operate-transfer model.
“This project is one of several steps AIIB is taking to support the development of Nepal's electricity sector,” added the press statement.
The bank has also decided to finance US$900,000 for the proposed 87 MW Tamakoshi V Hydropower Project. JICA and the European Investment Bank are also likely to invest in the project.
Likewise, the AIIB has decided to provide another US$ 1 million for the proposed Power Distribution System Upgrade and Expansion Project from its Project Preparation Special Fund.
These grants are part of AIIB's overall efforts in Nepal to increase energy generation capacity, reduce the demand-supply gap, upgrade transmission infrastructure and reduce electricity system losses, said AIIB.
AIIB Vice President and Chief Investment Officer DJ Pandian says, “By investing in hydropower and encouraging further private sector investment in the country, we will help drive economic growth and poverty alleviation efforts.”
“AIIB's investment will provide much-needed, long-term financing for a vital infrastructure project,” said AIIB Director General Dong-ik Lee. Lee further said,
“We are confident that our investment will demonstrate the viability of Nepal's sustainable energy sector to other potential private-sector investors.”