Both the organizations agreed to provide two billion rupees each in loan to UTKHPL to develop Upper Tamakoshi hydropower project (456 MW), which is the first mega hydropower project to be built with local investments.[break]
The loan amount has been extended to UTKHPL for 15-year period wherein the lenders have been promised with 11 percent annual interest on the investments and adjustment of the interest rates every year.
UTKHPL had completed loan agreement with Employees´ Provident Fund (EPF) on July 30, 2010 amounting to Rs 10 billion. It hopes to complete a similar deal with Nepal Telecom (NTC) soon where the latter will be providing six billion rupees in loan.
On July 26, Nepal Electricity Authority, NTC, CIT, EPF and RBS had completed shareholders´ agreement deal to develop the project, which is located at Lamabagar VDC in Dolakha district.
Speaking at the function, Energy Minister Prakash Sharan Mahat said the government had already provided two billion rupees for the project and that it is ready to pour in additional funds if need be.
“Efforts were made to derail this project. However, signing of this loan agreement has ensured that the project will move ahead smoothly,” Mahat said.
Indicating toward UCPN (Maoist), he said the country´s hydro sector is hit hard as they [Maoist] have been threatening to halt several projects.
The Department of Electricity Development had granted power generation license to UTKHPL on December 6. The draft of Power Purchase Agreement (PPA) has already been finalized by the company´s board.
As per the PPA draft, NEA will purchase one unit of power at Rs 3.23 and Rs 6.00 during wet and dry seasons respectively. This rate will go up to Rs 5.30 per unit after nine years of power generation.
UTKHPL plans to complete the project in four lots: Lot 1, work (civil construction); lot 2 (hydro-mechanical); lot 3 (electro-mechanical); and lot 4 (transmission and sub-station).
Mrigendra Bahadur Shrestha, project manager, informed that contract for lot 1 work has already been awarded to China´s Sino-hydro Corporation Limited. Remaining works will be awarded through bidding soon, he said.
Likewise, Mahat urged UTKHPL board to appoint chief executive officer (CEO) for the project through vacancy announcement at the earliest. “The investors might be discouraged if the selection process is delayed,” he noted.
Earlier, former executive director of NEA Arjun Kumar Karki was appointed CEO for the project. However, disputes between Mahat and MoE Secretary Shankar Koirala led to the annulment of Karki´s appointment by the Supreme Court.
The project´s estimated cost is about Rs 35.29 billion. The capital structure is: 70 percent loan (Rs 24.7 billion) and 30 percent equity (Rs 10.15 billion). Of the equity shares, 15 percent will be issued to public with residents of Dolakha being allocated 10 percent shares.
UTKHPL has projections that the project will be completed by the end of 2015.
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