IFC to buy stake in Upper Karnali



    International Finance Corporation The International Finance Corporation (IFC), the private sector lending arm of World Bank Group, has confirmed that it is currently in talks with India-based GMR Energy to acquire a stake in 900-megawatt Upper Karnali hydroelectric project.

    The confirmation was made by IFC country manager for Nepal, Bangladesh and Bhutan Kyle F Kelhofer during an interaction with selected journalists on Saturday. “Yes, we have held a couple of rounds of talks with GMR Energy,” said Kelhofer.

    The statement comes around two weeks after The Himalayan Times, quoting two sources,  reported that IFC had formally started holding talks with GMR to acquire stake in Upper Karnali hydro project.

    Kelhofer, however, declined to mention the stake that the IFC was planning to acquire in the project. “We are not allowed to acquire more than 20 per cent stake in any project, so we will never be a large investor.”

    When asked if talks of 10 per cent stake was correct, he only said: “That sounds about right. The stake should be significant enough to sit in the board, help ensure governance and transparency. But it’s never going to be above 20 per cent.”

    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 located on the Marsyangdi river in Manang and Lamjung districts. The government has identified the proposed project as one of the national priority projects and is being facilitated by the Investment Board Nepal (IBN).

    The Upper Karnali project, being developed by a consortium comprising GMR Energy, GMR Infrastructure and Italian-Thai Development Project, is also a project of national importance being liaised by the IBN.

    The export-oriented power project will give away 12 per cent of electricity that it generates upon completion of all construction works free of cost to Nepal Electricity Authority (NEA). Also, 27 per cent stake in the project will be extended to NEA free of cost and project’s ownership will be transferred to government for free within 30 years from 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 due to delay in signing of the Project Development Agreement (PDA) between the government and project developers. The PDA signing process has stalled for now 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 a fresh Financial Act is introduced.

    Source : The Himalayan Times