DEVELOPER SEEKS EXTENSION TO FINANCIAL CLOSURE DEADLINE Arun-III Hydropower Project

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    SJVN Arun-III Power Development Company (SAPDC), the developer of 900MW Arun-III hydropower project, has requested for an extension of the deadline for financial closure by a year.

    The company last week wrote to the Investment Board Nepal (IBN) seeking the extension of the deadline, which expires on November 24. In its letter, SAPDC has said supply disruptions due to last year’s earthquakes and subsequent Tarai unrest seriously affected the project’s work schedule.

    “In the letter, they have mentioned that last year was very unfavourable to conduct the regular job,” said IBN CEO Maha Prasad Adhikari, adding the company has also pointed out the government’s inability to timely acquire forest land for the project.

    IBN, however, is yet to decide whether to extend the deadline. “We will take this issue to the IBN board meeting which is chaired by the Prime Minister. The meeting will take a decision,” said Adhikari.

    SAPDC is the second hydropower developer after GMR Upper Karnali Hydropower Project to seek extension of the deadline for financial closure. GMR too had written to IBN in April making similar request.

    As per the project development agreement (PDA) between IBN and GMR, the latter is supposed to complete the financial closure by September 18. So it is highly likely the IBN’s decision on Upper Karnali will be a precedent for Arun III.

    According to an IBN source, the board is not in favour to extend the deadline for both the developers as the PDA itself has given the developers a cushion of one year to complete the financial closure in case it fails to do so within two years after signing the PDA.

    “The PDA signed with both the developers clearly states if the developers fail to complete the financial closure by the prescheduled time limit of two years, an extra year is automatically granted,” said the source. “Therefore, it is unnecessary to provide extensions as demanded by the developers.”

    The source said if the board gives a one-year extension, both the developers will effectively get two extra years to complete the financial closure. “However, IBN’s decision will be based on the Prime Minister’s direction in the upcoming board meeting,” said the source.

    Source : The Kathmandu Post