Rs 1.5b to be used to build two Taplejung-based projects
KATHMANDU, Aug 9: Remit Hydro Ltd (RHL) is mobilizing remittances sent by migrant Nepali workers to develop two hydropower projects -- Ghunsa Khola (71.5 MW) and Sinbuwa Khola (53.7 MW) projects.
This is possibly the first time that remittance is being used in infrastructure development.
Energy Secretary Suman Prasad Sharma issued survey license to RHL last week. The decision has paved the way for RHL to develop the projects in which Nepali migrant workers can buy equity shares worth about Rs 1.5 billion.
Both the projects are based in Taplejung. The company plans to develop the projects simultaneously
RHL is a special purpose vehicle promoted by Hydropower Investment and Development Company Limited (HIDCL) to develop the two projects by mobilizing money sent home by migrant workers.
The amount that RHL aims to mobilize from Nepali migrant workers is less than one percent of around Rs 600 billion that the country receives as remittance annually.
HDCL owns 51 percent stake in RHL. Similarly, migrant workers have been allocated 24 percent of shares while remaining 10 and 15 percent, respectively, will be allocated for project-affected locals and commoners.
RHL needs around Rs 19 billion to develop the two projects.
Deepak Rauniyar, CEO of HIDCL, said that the project will be developed in a fast track mode and that they will launch an awareness campaign to attract investment from Nepali migrant workers.
Nepal Rastra Bank (NRB) has floated foreign employment bonds eight times in the past six years. Of the Rs 9 billion worth of bonds issued, bonds worth only Rs 300.7 million have been subscribed, indicating lackluster response of migrant workers. These bonds yield returns in range of 9 to 10.5 percent.
“We will reach to almost all Nepalis plying their trade in foreign land and encourage them to buy equity shares,” added Rauniyar.
The new scheme is likely to attract migrant workers as it offers better returns than the NRB bonds.
Labor migration expert Ganesh Gurung said that the success of RHL depends on the rate of returns that the projects offer to the investors. “They will look for more attractive rate of returns than investments on current trend of purchasing land plots and houses in urban centers. Also, they will consider whether or not they can sell their shares when they want," added Gurung. “Migrant workers might invest what is remaining after spending on food, clothing and education of their family members back home.”
HIDCL, which was established five years ago, works on investment and development of hydropower plants. It has, so far, co-financed nine projects worth Rs 5.2 billion having installed capacity of 437 MW.