Tanahun Hydropower Project – Govt to finalize ToR for soft loan from EIB

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    KATHMANDU, Feb 11: The government is holding negotiations with the European Investment Bank (EIB) next week to finalize terms and conditions for soft loan of US$ 70 million for the construction of 140 megawatts Tanahun Hydropower Project.

    “A team from EIB is scheduled to visit Nepal next week to finalize the terms and conditions for the soft loan,” joint secretary at the Ministry of Finance (MoF) Madhu Marasini, who also heads the International Economic Cooperation Coordination Division (IECCD), told Republica.

    The government has already arranged a total of US$ 300 million soft loan from Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA) for development of the project. “We will seek an additional US$ 70 million from EIB in the meeting scheduled for next week,” Marasini said.
    The government has already finalized terms and conditions for the soft loan with ADB and JICA. “The terms and conditions with EIB will be different from that of ADB and JICA,” said an official at the Ministry of Energy (MoE).

    ADB has agreed to provide soft loan at 1.5 percent interest with 30 years of maturity period. Similarly, JICA has agreed to provide soft loan at 0.01 percent interest with 40 years of maturity period.

    “The meeting with EIB team next week will dwell on finalizing interest rate and maturity period,” the official said. The second reservoir type hydropower project after Kulekhani will be developed by Nepal Electricity Authority (NEA) after the government arranges fund for the project.

    Meanwhile, the government is also vying for a loan of US$ 30 million from Abu Dhabi Fund for Development (ADFD) for the development of the project. “ADFD has expressed interest in funding the Tanahun Hydropower Project. But any meeting with DFD has not been fixed so far,” said the official.

    ADB, which is a lead funding partner, had provided US$ 25 million in grant assistance to prepare the detailed report (DPR) of the project. “The project design has been completed,” said project Chief Mahesh Prasad Acharya.

    If everything goes as planned, the national pride project based in Bayas municipality of the Tanahu will start generating power by 2020. According to officials engaged in the negotiation process, ADB and JICA both also have taken Tanahun Hydro as a “prestige project”.

    Source : Republica