Govt secures $300m loan for Tanahun Hydro

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    KATHMANDU, Jan 30: The government has secured loan amounting to 67 percent of the total cost of US$ 450 million for the 140-MW Tanahun Hydropower Project from two development partners — Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA).

    After negotiations with both agencies during the last two weeks, the government has secured soft loan totalling US$ 300 million — US$ 150 million from each development partner — to develop the second reservoir type of hydropower project in the country after Kulekhani.

    “Negotiations with ADB and JICA have completed almost finalizing the loan,” Mahesh Prasad Acharya, project chief of the Tanahun Hydropower Project told Republica on Tuesday. “However, we have yet to sign loan agreement with both the partners.”

    He further added that pacts with loan agreements the partners might be signed within next one and a half months after the process for endorsement is completed from them for the proposed loan.

    “We are quite excited with the positive development in securing loan from both ADB and JICA and we are also hopeful that we might be able to generate the remaining amount to cover the project cost from other agencies as well,” Acharya added.

    The government had held negotiation meeting with JICA on January 24 and with ADB on Monday and Tuesday. ADB has agreed to provide soft loan at an interest of 1.5 percent per annum and the loan repayment period has been fixed a 30 years.

    Similarly, JICA has agreed to provide a soft loan at 0.01 percent interest with 40 years of payback period .”The recent developments indicate that we would be able to commence the project without facing any funds crunch,” he said.

    ADB has already supported to the government in preparing the detailed project report (DPR) of the project that will be implemented by Nepal Electricity Authority (NEA).

    Meanwhile, European Investment Bank (EIB) also has expressed interest to provide loan to the government for the development of the project, who is located at Byas Municipality in Tanahun district. “However, negotiation for loan with the EIB has yet to take place,” Acharya said.

    Officials said the project will start generating power by 2020 if construction is started in 2014. Officials privy to the fresh negotiations process said the ADB and JICA both also have taken Tanahun Hydropower Project as a ´prestige project´. Thierry de Longuemar, vice president for finance and administration of ADB, during his visit to Nepal in November, had laid emphasis on development of hydro electricity in Nepal.

    Source : Republica