IFC may lend up to $26M to Cross Border Power Transmission Company

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    The current project is part of a cross-border transmission line between Nepal and India, to facilitate up to 1,000 MW of power trade.

    International Finance CorporationInternational Finance Corporation (IFC), the private sector investment arm of the World Bank Group, is looking to lend up to $26 million to Cross Border Power Transmission Company Ltd (CPTC) for its Nepal-India electricity transmission and trade project (NIETTP).

    Total cost of the project is estimated to be around $37 million and in the next two years, 70 per cent of the cost is proposed to be debt-financed while the remaining will be raised as equity from shareholders. IFC is expected to lend the money in two tranches – an A loan up to $13 million and a B loan up to $13 million as well.

    The current project is part of a cross-border transmission line between Nepal and India, between Dhalkebar and Muzaffarpur, to facilitate up to 1,000 MW of power trade.

    CPTC is a joint venture among four companies – Power Grid Corporation of India Ltd (26 per cent), Satluj Jal Vidyut Nigam Ltd (26 per cent), IL&FS Energy Development Company Ltd (38 per cent) and Nepal Electricity Authority (10 per cent).

    As there is limited energy trade in Nepal, the project can set a precedent for the region and can be a best practice, to be followed by potential inter-regional interconnections.

    In 2011, the World Bank approved a $99 million package for NIETTP to help Nepal mitigate the ongoing energy crisis and back in 2009, it also decided to provide a loan to Nepal for the construction of 400 KV cross-border electricity transmission lines. But the project has been stalled for the last three years due to financial constraint.