Energy Boost: Key Loan Agreement Signed for Upper Modi A Hydropower

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With the government’s ambitious target of producing over 10,000 MW of electricity for export to India and increasing domestic consumption, the signing of the loan agreement for the construction of 42 MW Upper Modi A Hydropower Project is significant.

At a time when Nepal Electricity Authority (NEA) and its subsidiaries are constructing 1061 MW Upper Arun, a four-digit hydropower project, and 635 MW Dhudhkoshi Hydropower Project and dozens of other projects with a capacity of 16000 MW, the first largest storage project, Upper Modi A is a small one. But it has its own significance.

Kulman Ghising, Managing Director of NEA and Chairman of Modi Hydropower Company, said that Nepal’s hydropower development will take a big leap in the coming days. “Through the authority, the construction of projects with 3-digit capacity is now progressing to 4-digit capacity, and the financial management of the 1061-megawatt upper Arun and 635-megawatt Dudhkoshi reservoir hydropower projects will be carried out by 2024,” Ghising said.

“About 16,000 megawatts of projects by the authority and its subsidiary companies are at the stage of study, construction and investment gathering,” MD Ghising said.

“The NEA and its subsidiaries are currently studying, constructing and gathering investment for approximately 16,000 megawatts of projects,” said MD Ghising.

With the signing of the agreement, NEA’s subsidiary Upper Modi Hydropower Company Ltd. will manage the financial aspects of the construction of the 42 MW Upper Modi A hydropower project.

Located in the Annapurna Rural Municipality of Kaski District, the project is estimated to cost Rs. 10.57 billion with 70 percent debt and 30 percent equity financing. The NEA and the general public will invest in the equity.

As per the agreement signed at a function on Monday, NMB Bank and Hydroelectricity Investment and Development Company (HIDCL) will co-finance the project with a total investment of Rs. 7.4 billion including interest during the construction period. The loan will be divided into 4.4 billion rupees from NMB Bank and 3 billion rupees from HIDCL.

NMB Bank and Hydroelectricity Investment and Development Company (HIDCL) will co-finance the project with an investment of 7.4 billion rupees, including interest during the construction period. NMB Bank will provide 4.4 billion rupees and HIDCL will provide 3 billion rupees of the total loan.

The promoters of the project, Modi Hydropower Company Ltd., NAMB Bank and HIDCL, signed a tripartite loan agreement in the presence of Minister for Energy, Water Resources and Irrigation Shakti Bahadur Basnet.

Minister Basnet said that the focus is now on increasing production and domestic consumption as well as exports as the export of 10,000 megawatts of electricity to the Indian market has been secured for the next 10 years.

Minister Basnet said that the government has clear guidelines to increase domestic consumption of power generated in the country and sell the saved power to India and Bangladesh.

“In the past, hydropower was considered only as infrastructure and its economic potential was not understood by looking at electricity consumption. “It has been seen that those who do not make any progress for years after getting a production license (generation license) and after signing a power purchase agreement (PPA), they do not work even one percent for 9-10 years. We will soon take an important decision to put an end to this situation,” he said. “The state is not behaving unfairly, including electricity tariffs, it is behaving justly,” said Minister Basnet.

The state is taking steps to end this situation. It is important for the state to act fairly, including with regard to electricity tariffs,” said Minister Basnet.

“Discussions are underway to further develop and strengthen infrastructure structures between Nepal and India for export of domestically produced electricity. In the coming days, Nepal’s hydropower development will take a giant leap forward,” said Gopal Prasad Sigdel, Secretary, and Ministry of Energy.

HIDCL CEO Arjun Gautam emphasized the importance of completing government projects on time. He said the company is ready to meet the government’s target of producing 28,000 megawatts of electricity by 2035.

Sunil KC, CEO of NMB Bank, said that investing in the authority’s project is a historic opportunity and a milestone for private banks.

The aim is to complete construction of the Upper Modi A hydropower project within four years of commencement. Preparations for the project are currently underway. The evaluation of the bidder’s technical proposal for the civil and hydro mechanical works in Phase 1 of the project is in its final stage.

Construction of offices and residences at the project site is underway. Private land acquisition and forest land use have been approved. NEA Engineering Company has been appointed to supervise the construction of the project and will also construct the 18.2 MW Upper Modi Hydroelectric Project.

Source: Spotlight