The project will be paid in US dollars for foreign loan repayment period or 10 years, whichever is earlier
KATHMANDU, Dec 29: The government has signed Project Development Agreement (PDA) with a consortium led by a South Korean government undertaking to build Upper Trishuli-I (216 MW) hydropower project.
Dinesh Kumar Ghimire, joint secretary of the Ministry of Energy and Bo Seukyi, a representative of Nepal Water and Energy Development Company Pvt Ltd (NWEDCL), signed the PDA document on Thursday.
The cabinet had approved the PDA document last week.
According to the PDA, NWEDCL will develop the project in build own operate and transfer (BOOT) model and hand it over to the government after 35 years. The project has to be completed in five years.
As per the PDA, the government and the developer must sign Power Purchase Agreement (PPA) within six months. Similarly, the company has to achieve financial closure within two years.
The project will produce 1,465 GWh of electricity annually. The government has issued sovereign guarantee to the project, meaning it will pay the company even if the energy generated by it not consumed.
Independent power developers have opposed the decision, accusing the government of favoring foreign developers while signing PPA.
The government has inserted 'take and pay' provision in the PPA signed with independent developers. This means the government will only pay for the energy consumed by it. Independent developers have been maintaining that the provision makes their projects unbankable.
According to Ghimire, the company will be paid in US dollars for foreign loan repayment period or 10 years whichever is earlier.
The estimated cost of the project has not been mentioned in the PDA. NWEDCL, however, had earlier said that the project will cost US$ 590 million.“
"The project cost is totally the matter of PPA. Nepal Electricity Authority will sign PPA on its own by carrying out due diligence audit," Ghimire added.
Korea South East Co Ltd (KOSEP), a Korean government undertaking, holds 52 percent stakes in NWEDCL. Similarly, other Korean companies -- Daelim Industrial Co Ltd and Kyeryong Construction Co Ltd -- have 16 and 10 percent shares, respectively, in the company. International Finance Corporation, the private sector lending arm of The World Bank, holds 12 percent of shares. Remaining 10 percent has been allotted for project-affected locals.
The project is based in Haku VDC of Rasuwa district. The water of Trishuli River will be diverted through a 9.25-kilometer tunnel. The project will have three turbines of 72 MW capacity each.