India’s EXIM Bank approves $155m soft loans for 3 projects

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    KATHMANDU, JUN 05 –

    Nepal-IndiaEXIM Bank of India has finally approved three projects — Rahughat Hydropower Project, Koshi Corridor Transmission Line Project and Solu Corridor Transmission Line Project — for its soft loan support worth $155 million. The Ministry of Finance (MoF) received a formal letter from the bank on Monday.

    Madhu Marasini, chief of the international economic cooperation coordination division at the ministry, confirmed the receipt of the letter. “The Bank has approved the loan support to Nepal for the development of three projects,” he said.

    Marasini said the Indian bank has approved soft loans worth $36 million for 32-MW Rahughat Hydropower Project, $90 million for 220-kv Koshi Corridor Transmission Line Project and $29 million for 132kv Solu Corridor Transmission Line Project.

    Some two years ago, the government had requested the Indian EXIM Bank to provide $250 million in soft loans for the construction of 14 infrastructure projects, including hydropower, transmission lines and roads.

    A contract agreement between the government and the bank was signed on October 21, 2011, in New Delhi during the visit of the then Prime Minister Baburam Bhattarai. As per the agreement, India will provide long-term loans for 30 years at 1.75 percent interest.

    Although the credit agreement under the line of credit was scheduled to come into effect from June 29, 2012, the bank delayed releasing the amount after the Nepal government failed to submit the progress reports of the said 14 projects in time. The government submitted progress reports this year. The detailed project report of Modi-Lekhnath 132-KV Transmission Line, however, is yet to be submitted.

    “As the Indian bank is also processing other projects to release the loans, we will receive a notification soon,” Marasini said, adding his ministry will ask the Energy Ministry to submit details on when and how much amount does the latter require to finance these projects. “Once we forward the details to the bank, it will begin releasing the loans,” he said.

    Energy Secretary Hari Ram Koirala said the ministry will soon accelerate development of Rahughat project, while the Nepal Electricity Authority (NEA) will be asked to call a fresh tender to appoint constructors for the remaining two transmission line projects.

    Meanwhile, independent power projects expressed confidence about the construction of Solu and Koshi Corridor Transmission Line Projects. They said the NEA has not been able to sign Power Purchase Agreement (PPA) with more than 15 hydropower projects to be built in Solu and Koshi corridor due to uncertainty about construction of the transmission lines.

    “More than 15 projects are waiting for PPA with NEA although they are all set to enter the construction phase,” said Subarna Das Shrestha, president of the Independent Power Producers Association of Nepal. “We expect the NEA to begin the construction of transmission line projects with the loan amount which will give relief to project developers.”

    Source : The Kathmandu Post