Financial closure deadlines for Arun III, Upper Karnali extended again

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KATHMANDU, Nov 14: The Investment Board of Nepal (IBN) has once again extended the deadline for the developers of Arun III Hydropower Project and Upper Karnali Hydropower Project to achieve the financial closures of both projects.

The board meeting held on Monday under the chairmanship of Prime Minister Sher Bahadur Deuba decided to extend the deadline for both projects in line with the demands made by the project developers.

GMR Upper Karnali Hydropower Ltd, a subsidiary of GMR Energy India, has received additional one year to achieve the financial closure for Upper Karnali Hydropower Project.

Similarly, the IBN has also granted a six-month extension for SJVN Arun-III Power Development Company Pvt Ltd (SAPDC), a fully-owned subsidiary of Indian government’s Satluj Jal Vidyut Nigam Limited (SJVNL), to finalize the financial agreement for the Arun III Hydropower Project.

Both mega projects, being developed by Indian developers, are of 900-megawatt capacity.

These developers had sought deadline extension to achieve financial closure from the IBN citing delay due to the problem of forest clearance and land acquisition in the areas where these two mega projects are being developed.

With the extension of the deadline, Arun III Hydropower Project’s financial closure should be now completed by March 30 next year while GMR should achieve its financial closure by September 18 next year.

SJVNL’s earlier deadline to achieve the financial closure had expired in September 30 this year, while GMR was required to complete the financial closure by September 18. As both developers could not complete financial closures, the IBN decided to extend the deadline for them.

“Since the forest clearance was delayed from our part, we had to extend the deadline for them to achieve financial closure,” said Maha Prasad Adhikari, the IBN’s chief executive officer.

“We extended the deadline due to our obligation. Now it is their responsibility to make sure that they arrange funding within the extended deadline,” added Adhikari.

This is the second time these Indian developers have received deadline extension only to finalize funding. Earlier in January, the IBN had provided them an additional year to complete financial closure after they failed to do so last year citing impact of the 2015 earthquake.

The initial two-year deadline given to GMR had expired on September 18 last year, while SJVN had to complete financial closure by November 24 last year.

Located in three districts in western Nepal – Surkhet, Achham, and Dailekh – Upper Karnali hydropower project was awarded to GMR in 2008 as an export-oriented project aiming the Indian market. Arun III is also an export-oriented Peaking Run-of-River (PRoR) project with 3.65 hours minimum peaking capacity, which is being developed in Sankhuwasabha district in eastern Nepal. Both projects should be completed within five years of completing financial closure.

Meanwhile, the meeting also instructed the IBN office to carry out works of detailed feasibility study and detailed project report of Route Number 2 (Nagdhunga-Kalanki-Koteswor-Dhulikhel) of Kathmandu Valley Metro Train Project based on the report of a member of National Planning Commission.

Source:My Republica