KATHMANDU, NOV 22 –
Ankhukhola Hydro-power Project , the lone hydropower project being developed by the private sector yet, has received a soft loan from the government under its Load Shedding Reduction Action Plan.
The action plan has pledged to provide soft loans worth Rs 20 million per megawatt to the project at the interest rate of 10 percent. As per the mechanism set under this scheme, such loans are extened only to the projects that are finding hard to get resources from the existing banks.
In such case, the RBB seeks recommendation from the lead bank of consortium financing the project on an additional loan amount it has to extend to complete the project in time. The RBB then seeks the government approval for financing and disburses necessary loans.
Of the seven hydro projects that received the Finance Ministry’s approval for RBB loans under the scheme, Akhukhola have already received the loan, with Bhagwati Hydropower being disqualified as it has already started production of energy.
RBB CEO Krishna Prasad Sharma said they had sought recommendation of the lead bank of consortium concerned to finance the remaining projects. “We had asked them for their recommendation before Dashain but they are yet to act on it,” he said.
Having financed the Aankhukhola project, the RBB has already sought reimbursement of loan amount from the Finance Ministry. The mechanism set under this scheme requires the RBB to provide soft loans to the recommended projects and it will seek reimbursement from the ministry of the lent amount.
However, the RBB will have to recover the amount only after the project starts producing energy. With the government deciding to increase the power purchase agreement (PAA) rate by 20 percent for such projects, a condition has also been put that the income made from the increased PPA rate will have to be used in repaying a government loan.
The government introduced such scheme when the private sector developers were complaining about lack of resources at cheaper interest rate. They had demanded the loans at the interest rate at around 8 percent—the same rate fixed by the government—while providing loans to the Nepal Electricity Authority.
With other commercial banks too offering better interest rate, Sharma says the government’s offer may not be as attractive at the moment.
However, the Ministry of Energy said that they had already recommended 23 projects for consideration from the Finance Ministry for possible soft loans.
Source : The Kathmandu Post