“We have made arrangements for financing the project. We will now complete the financial closure in one-and-half to two months after finalizing the interest rate with the Employees Provident Fund (EPF),” Mrigendra Bahadur Shrestha, Project Director for Upper Tamakoshi, told myrepublica.com. [break]
The project was said to have been on hold due to delay by RBS in taking a decision. But with the RBS board of directors´ decision some 10 days ago to go ahead with the investment, the required financing of Rs 22 billion has been lined up. The total cost of the project is Rs 33 billion.
The project is going to be constructed through a loan/equity share ratio of 70/30. Besides RBS, Nepal Telecom is investing Rs 6 billion in the project, EPF Rs 12 billion and the Citizen Investment Trust Rs 2 billion, with a 10 percent-equivalent equity share.
Nepal Electricity Authority (NEA) is also investing Rs 9 billion in the project. The government has guaranteed that it will cover the remaining amount if NEA is unable to generate enough funds.
“The board has decided to invest Rs 2 billion with an additional Rs 200 million in project shares,” Rajendra Lohani, a member of the board, told myrepublica.com on Friday.
This is the largest project being commissioned solely by domestic investors. Implementation of UTKHEP is crucial for fighting the load-shedding crisis and for the government´s recently launched five-year plan to end all power cuts in the country.
Work on the Upper Tamakoshi is to commence by June as per the government plan, upon completion of the link-road, construction of which is scheduled to be over by mid-May. The main civil work contract worth Rs 13.63 billion was won by Sinohydro Corporation of China in December. The amount was Rs 1.50 billion cheaper than NEA´s original projection.
Upper Tamakoshi has been accorded high priority by the government. Nepal Telecom agreed to invest in the project after Finance Minister Surendra Pandey himself assured that it will get a guarantee from the government.
The project is considered one of the most attractive in Nepal. The per MW construction cost of the project is Rs 120 million only whereas the general cost in other projects is estimated at Rs 150-160 million.
Govt, EPF at odds on interest rate
Meanwhile, the government and the EPF have failed to reach any agreement on the interest rate for the loan. Minister for Energy Dr Prakash Sharan Mahat said that the EPF has insisted on raising the rate.
“The stakeholders’ meeting convened last week could not reach an agreement on the issue of interest rate brought up by EPF,” Mahat said, adding, “We have assured EPF that this is not a permanent rate and it will be determined as per historical trends.”
He also said a decision to this effect will be taken “very soon”.
akanshya@myrepublica.com
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