KATHMANDU, June 30
Korea Water Resource Corporation (K-Water) has submitted a working plan of completing Upper Modi A Hydropower Project in 2020, four years after start of construction in 2017.
It has proposed to start civil construction from 2017 completing pre-construction works like arrangements of investment, power purchase agreement (PPA), land acquisition and environmental impact assessment within two years. The 47-MW project being constructed for internal consumption is expected to generate 283 million units of electricity a year.
The Nepal Electricity Authority (NEA) stated that the project will move forward after the proposal of K-Water is approved through a joint meeting. NEA and K-Water will establish a joint company for development of the project after the joint meeting. Actual cost of the project has yet to be determined even though K-Water has proposed the project cost. Feasibility study by NEA has put the estimated project cost at around Rs 7.50 billion (US$ 780 million). There can be some changes in the estimated cost. Both the parties have already approved investment structure for the project. K-Water will invest 30 percent, NEA 60 percent, and the rest 10 percent will be collected from the general public. There will be 60 percent of loan investment and 40 percent of equity capital.
K-Water is responsible for making financial arrangements for the project. It plans to bring investment from the Asian Development Bank (ADB) and Export Import (Exim) Bank of Korea, both of whom have already agreed to invest, but the duo will only invest after integrated economic and financial report is prepared. NEA and K-Water had signed Project Development Agreement (PDA) in April, 2011 and K-Water had agreed to invest 80 percent in the project and NEA 20 percent at the time. But K-Water has since rearranged the investment structure saying it will invest only 30 percent after the project did not turn out to be financially attractive following feasibility study. K-Water decided to reduce investment after the feasibility study, done jointly with NEA, showed that the generated electricity should be sold at a minimum rate of 8.50 cents or Rs 7.22 per unit to take loans at commercial interest rate.
The project required soft loans after NEA stated that it cannot pay more than 6.50 cents or Rs 5.52 for every unit. Involvement of the Nepal government became necessary for the project due to ADB’s condition that K-Water cannot invest abroad taking soft loans despite being a government-owned company.
The run of the river project will be constructed in Parbat district. Its power house will be constructed in Syaule Bazar and the length of its tunnel will be six kilometers. The electricity generated from this project is planned to be connected to the proposed New Modi Sub-station at Dimuwa, Parbat. An 11-kilometer dirt road to the project site has already been completed while environmental study has also been completed and approved by the body concerned.
Source : Karobar Daily
