Four years elapsed, GMR is yet to sign financial closure : Upper Karnali Hydropower Project

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    Seeks another time extension of one year

    KATHMANDU, Aug 26: Bangladesh is eagerly waiting to import Nepal’s electricity. Equally eager is Indian developer GMR to build the plant at Upper Karnali Hydropower Project and export power to Bangladesh. But things are not moving ahead as expected.

    GMR says it has already signed a Memorandum of Understanding with Bangladesh to export 500 MW of electricity produced at the plant. GMR wants a full-fledged PPA on all commercial terms but the delay in endorsement of the Indian Guidelines on Cross Border Trade of Electricity 2016 has put the entire process on halt.

    But the Indian government, which has pivotal role in allowing the cross border trading, has remained silent on endorsing the revised guideline that includes comments from the government of Nepal and Bhutan.

    GMR also seems frustrated with the delay by Government of India, particularly on endorsing revisions on the new electricity guidelines to pave the way for financial modality of trading electricity via Indian grid connectivity.  GMR, which on last week sought time extension for financial closure for the third year, has appealed the Government of Nepal for taking diplomatic initiatives with India to help with the project.

    Bangladesh inked an energy cooperation deal with Nepal two weeks ago to import 500 MW of electricity from Nepal. Energy-starved Bangladesh is desperate to get clean energy to sustain its economy’s growth rate. Insiders of the energy sector have said that the 500 MW will come from Upper Karnali. The trading will occur through the Indian transmission line.

    The latest bid for time extension of one year is because it has not yet signed financial closure for the project of US $ 1.2 billion and its deadline for the same is expiring on September 19.

    This is the third extension of time for the project. A year’s extension was given in accordance with the Project Development Agreement signed in September 2014, and then another year was given due to the government’s delay in providing forest land for the project. Initially, it was given two years to garner a financial closure.

    Inside sources at the Investment Board Nepal (IBN) have confirmed that it has received application for extension, citing at least two major reasons behind the delay in financial closure. “They are yet to get authority to clear all forest area in the project site as the Government of Nepal permitted earlier,” said the source.

    The project of 900 MW, located in the western part of Nepal, is one of lucrative projects of the country. Some stakeholders had criticized the government back in 2014 for not building the project on its own. Meanwhile, the private sector and some others had lauded the move saying ‘a historic bilateral deal was made’.

    Another privy source at IBN claimed: “There are also chances that GMR may immediately sign power purchase agreement (PPA) with Bangladesh inserting major commercial terms, which may give impetus to proceed for reaching financial closure.”

    The agreement is a must for making a financial closure happen, and the IBN officials claim that the company is regularly in touch with the banks and financial institutions interested to inject fund in the project.

    GMR needs a permission of India’s Central Electricity Regulatory Commission for signing a final PPA but it has not yet received one. The guideline had several discriminatory provisions, on which Nepal had sent comments for revision a year ago. The guideline was prepared as per the Power Trade Agreement signed in August 2014 between the two countries.

    The next board meeting of IBN, led by Prime Minister KP Sharma Oli, may decide on time extension but officials say that the board needs to make a special decision as the PDA does not permit any further time extension.

    Despite Republica’s repeated attempts on Friday and Saturday to get information about the GMR’s request, IBN’s CEO Maha Prasad Adhikari and Spokesperson Uttam Bhakta Wagle were not available for comments. Their cell phones were switched off.

     

    Source : Republica