Govt, WB to discuss $27m loan for Kali Gandaki

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    KATHMANDU, APR 02 –

    kaligandki-aThe government and the World Bank are to hold negotiations for a soft loan worth US$ 27.26 million for the Kali Gandaki Rehabilitation Project. The funds will be spent on maintenance and rehabilitation of the project which is the largest operational hydropower plant in the country.

    The power station at the 144 MW project has been facing problems related to floating debris and sediment at its headworks from the very beginning.

    The hydraulic performance of the headworks and desander has also been below par leading to unexpected damage to the turbines and other hydro mechanical parts resulting in frequent shutdowns for repair.

    This has caused losses in the overall generation from the project.

    The government said that it was strategically important to repair and maintain the largest power project to save it from collapsing and aggravating the already bad load-shedding situation in the country.

    Negotiations are set to begin after the World Bank agreed in principle to extend credit for the project. “The negotiations will finalise the terms and conditions for the loans and other details before the agreement is signed,” said Madhu Marashini, chief of the International Cooperation Department of the Finance Ministry.

    According to him, the WB will lend the money at 1.25 percent interest and a 0.75 percent commitment charge and a 0.5 percent service charge. Rehabilitation work at the project is expected to be completed within the next four years while Nepal will have to repay the loan in the next 20 years.

    A sum of US$ 10 million was allocated under the World Bank-funded power development project which expired at the end of December 2012. However, the project was redesigned and extended with an additional aid commitment from the global lender.

    “The World Bank approved our request not to return the unspent money but reinvest it in Nepal in a repackaged project,” said a ministry official. As per the new arrangement, most of the components of the power development projects were included in the repackaged project and a few other components such as Ramechhap Rural Electrification and Rehabilitation of Multi-Fuel Plants were added.

    Formerly, resources worth US$ 42.47 million had been allocated for different components of the Power Development Project which included the Hetauda-Bharatpur 220 MW transmission line, Hetauda-Bharatpur substation, Bharatpur-Bardaghat transmission line, support Nepal-India cross-border transmission line, Kali Gandaki Rehabilitation Project and institutional strengthening of the Nepal Electricity Authority. The credit was later cancelled.

    However, most of these components have been included in the repackaged project by merging them and adding a few components with additional commitments.

    The bank has pledged US$ 60 million for the redesigned project which is US$ 10 million less than what the government has asked, according to ministry officials.

    Source : The Kathmandu Post