Banks and financial institutions have increased investment in hydropower sector with commercial banks investing Rs 80 billion in the first nine months of the current fiscal year.
The Nepal Rastra Bank (NRB) estimates it to rise further by the end of the fiscal year. Development banks and the Hydropower Investment and Development Company Limited (HIDCL) also invested around Rs 1 billion but finance companies and micro-finance institutions have not invested in the sector.
Bank investment in the sector has increased in recent times after facilitation by the NRB by declaring the sector as good productive sector. Banks, looking for sectors to invest, have taken hydropower sector as an attractive sector for investment. Deputy Governor at the NRB Shiva Raj Shrestha said banks and financial institutions, focused on short-term and consumer loans, have also increased investment in hydropower by diversifying their investment.
He added that investment of commercial banks in the sector will cross Rs 100 billion this fiscal year from Rs 51 billion in the last year. Speaking at the meeting of the Agriculture and Water Resource Committee of the parliament on Sunday, he claimed that banks and financial institutions have increased investment this year due to the mandatory provision requiring them to invest 20 percent of total loans into productive sector. The central bank allows investment of up to 20 percent in energy and agricultural sectors.
“Banks have been lending at an interest rate of 4-9 percent depending on the nature of project. They have increased investment in the sector due to facilities for rescheduling and refinancing, and provisioning of just one percent in case of delay in recovery of loan,” he reasoned. He revealed that grace period for repaying loan and counting interest during the period of construction also as profit are also allowed. Banks have signed loan agreements with around one and half dozen small and big hydropower projects (1-100 MW) until now, according to the Department of Electricity Development.
Kaveli A (37.6 MW), Namarjun Madi (12 MW), Dordi 1 (10 MW), Nyadi (30 MW), Lower Hewa (21.6 MW), Super Dordi (49.6 MW), Singati Khola (16 MW), Upper Dordi (25 MW), Upper Hewa (8.5 MW), Ghatte Khola (5 MW) and Rupse Khola (4 MW) have signed loan agreements, according to the department. The World Bank and International Finance Corporation have signed loan agreement for Rs 7.86 billion for Kaveli.
Employees’ Provident Fund (EPF), Citizen Investment Trust (CIT) and Rastriya Beema Sansthan have also increased investment in the sector.
Monthly loss of Rs 400 million while procuring electricity from India
The Nepal Electricity Authority (NEA) is suffering monthly loss of Rs 400 million while buying electricity from India. It has already suffered loss of around Rs 5 billion while procuring electricity from India in one year. Cumulative loss of the state electricity monopoly has also increased due to loss of up to Rs 3 per unit.
Managing Director (MD) Mukesh Raj Kafle said financial state of the NEA is deteriorating due to such reasons. “We are facing problems to even implement some government programs due to poor financial health. The NEA cannot sustain unless the government bear this,” he added. He also requested parliamentary committee to facilitate hike of electricity tariff and argued that the problem has compounded in lack of tariff review.
Deputy MD at the Finance Department of NEA Lekhnath Koirala said there is loss of up to Rs 3 while procuring from the Northern Bihar Electricity Board. He revealed that Rs 26 billion will be spent on procurement of electricity from India this year as the quantity of import has increased, and estimated that total income of the NEA will reach around Rs 32 billion. The NEA will suffer loss of around Rs 5 billion in the current fiscal year. The NEA is currently importing around 300 MW from India.
Cumulative loss rises to Rs 57.63 billion
Cumulative loss of the NEA has risen to Rs 57.63 billion this year. The NEA, that was in profit until 2001, has been in loss since Kali Gandaki A (144 MW) came into operation. Cumulative loss has now reached Rs 30.20 billion after the government wrote off loss of Rs 27.53 billion five years ago. It, however, has over Rs 10 billion to receive in tariff.
Loan taken to develop different projects has increased to Rs 98.15 billion. There is leakage of 25 percent in the system. It earns Rs 250 million more in income when leakage falls by one percentage point. It is currently losing around Rs 5 billion due to the leakage.
Source : Karobar Daily