IFC plans stake in Upper Karnali hydro project

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    International Finance CorporationKATHMANDU: The International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, has formally started holding talks with India-based GMR Energy to acquire a stake in the 900-megawatt Upper Karnali hydropower project, at least two people with knowledge of the matter said.

    The revelation comes at a time when Electricité de France SA (EDF), a state-owned power company in France, is said to be in talks with GMR Energy to buy a stake in the same project.

    “Yes, the IFC is interested in acquiring a stake in GMR’s Upper Karnali hydro project because the company can be trusted and it has carved a niche for itself in the sector,” a reliable source said. While he did not mention the stake that the IFC was planning to acquire in the project, another source said the IFC was seeking to acquire ‘10 per cent stake in the project’.

    The Himalayan Times tried to confirm the matter with IFC and GMR. But IFC resident representative Valentino S Bagatsing said he would have to confirm with his headquarters in Washington, while assistant vice president at GMR Group Rajib Misra hung up the phone saying he was ‘not the concerned official to discuss the issue’.

    However, the sources that THT talked to said that at least two rounds of talks have been held between IFC and GMR officials on the matter.

    If the deal goes through, it will be the second time that the IFC and GMR will be entering into partnership to develop hydroelectric project in Nepal.

    Earlier in December, the IFC had signed an agreement with GMR Energy, the energy arm of the GMR Group of India, to jointly develop the 600MW Upper Marsyangdi-2 hydropower project.

    The Upper Karnali project is being developed by a consortium comprising GMR Energy, GMR Infrastructure and Italian-Thai Development Project. Once ready, developers of the export-oriented project will give away 12 per cent of power free of cost to the government. Also, the developers have to hand over the project to the government for free within 30 years of the date of commencement of power generation.

    Despite these benefits, the country has not been able to put construction of the project on a fast track. And lately negotiations on Project Development Agreement between the government and project developers have also stalled. This was because of demands for income tax concession placed by the project developers. The government has said such discounts can be extended only at the beginning of the fiscal year when the fresh Financial Act is introduced.

    Source : The Himalayan Times