Govt starts negotiation with EIB

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    European Investment BankKATHMANDU, Feb 21: The government on Wednesday formally started negotiations with the European Investment Bank (EIB) to finalize the terms and condition for US$ 70 million in loan from EIB to develop the 140 megawatts Tanahun Hydroelectric project.

    “A two-member team from EIB has arrived in the capital for negotiations,” Chief of the Tanahun Hydropower Project Mahesh Prasad Acharya told Republica. This is the first time the government has sought loan from EIB.

    The EIB team has offered two options — floating and fixed interest rates for the loan, said Acharya, adding, “We have to decide which one to opt for.”

    According to Acharya, the floating interest rate will fluctuate as per the global economy´s ups and downs whereas fixed interest rate will be stable once it is decided.

    “However, the interest rate will be fixed when we actually accept loan from EIB,” he said.

    EIB is the third funding partner to invest in the Tanahun Hydropower Project. The government has already finalized terms and condition with the Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA) for loans worth US$ 170 million and US$ 150 million respectively.

    “The meeting with EIB officials will continue for the next couple of days,” said Acharya, adding that the talks were moving ahead positively.

    The government, after finalizing the terms and conditions with EIB for loan, will hold negotiations with the Abu Dhabi Fund for Development (ADFD) for loan worth US$ 30 million.

    As of now, the government is expecting to get loan from EIB at an interest rate of less than 3 percent. “Issues such as actual interest rate and maturity period for loan are yet to be negotiated,” Acharya said.

    JICA has agreed to provide soft loan at 0.01 percent interest with 40 years of maturity period. “Given the recent developments, the project would start on time,” said Acharya.

    The national pride project located in Bayas municipality of Tanahu will start generating electricity by 2020 if the construction of the project begins in 2014. According to officials involved in the negotiations, ADB and JICA have also taken Tanahun Hydropower Project as a “prestige project”.

    Source : Republica

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