KATHMANDU, Nov 15 :
The cabinet has extended the deadline for the financial closure of the Upper Trishuli I by a year saying that the given time for Project Development Agreement (PDA) was not enough after about a month later.
The deadline had expired on October 19. The cabinet on Thursday took the decision as per the proposal of the Ministry of Energy (MoE). The MoE has also revised the PDA guidelines to encourage investors. As per the new guidelines, local partners need show 25 percent of equity while applying for PDA. Earlier, they were required to show 50 percent of equity.
The NWEDC is a joint-venture company developing the 216 MW project located in Rasuwa. The estimated cost of the project is US$ 500 million. As per the existing provision, equity investors must invest a minimum of 20 percent of the project cost.
“We decided to amend the PDA guidelines as we felt the practice of showing net worth should not be a stumbling block while applying for PDA,” Keshav Dhwaj Adhikari, officiating secretary at MoE said. “Ultimately, the developer has to bring together all confirmed investments by the time of completing PDA.”
We decided to revise the guidelines also because the MoE found some flaws in the PDA guideline endorsed about a year ago.
“The project is lucrative and it generates substantial amount of energy even during dry months,” argued Adhikari.
The South Korean government and International Finance Corporation — a wing of the World Bank Group – are among the investors of the project, he added.
Korean South East Power Company, a South Korean government undertaking, has committed 50 percent investment. Similarly, Daelim Industrial Company and Kyeryong Construction Industrial Company have committed investment of 15 and 10 percent, respectively. IFC is the 15 percent equity partner of the project.
The government led by Baburam Bhattarai had overturned a decision of erstwhile Energy Secretary Hari Ram Koirala to scrap the survey license of the project about a year ago. It had then signed a contract paper with the project which required the developer to attain financial closure by October 19 and acquire generation license by April 2014.
“The developer has already invested millions of rupees to build access road and other necessary infrastructures. We shouldn´t scare away investors as we are desperately trying to attract foreign investment,” argued Adhikari.
Pradeep Dangol, liaison manager of NWED, blamed the government for the delay in PDA. “We couldn´t complete formalities in time as the MoE took many months to change the PDA guidelines,” said Dangol.
Source : Republica