Banks and Financial Institutions have increased investment in hydropower sector. The financial institutions focused on short-term and consumer loans have managed their portfolio and increased investment in hydropower.
Different banks have made loan investment of Rs 30 billion in projects with combined installed capacity of 219 MW through co-financing in the past one year. Banks have signed loan agreement for four hydropower projects in the past one and half months alone. Over a dozen projects are preparing to sign investment agreement, according to the Department of Electricity Development.
Investment agreements for 37.6 MW Kaveli A, 12 MW Namarjun Madi, 10 MW Dordi, 30 MW Nyadi, 21.6 MW Lower Hewa, 49.6 MW Super Dordi, 16 MW Singatikhola, 25 MW Upper Dordi A, 8.5 MW Upper Hewa, 5 MW Ghattekhola and 4 MW Rupsekhola have been signed in the past one year, according to the department. Domestic financial institutions will invest in 10 of these projects and the World Bank and International Finance Corporation (IFC) will invest Rs 7.86 billion in Kaveli A.
Promoters now have an easier time as institutions like the Employees Provident Fund (EPF), Citizen Investment Trust (CIT), and Hydropower Investment and Development Company Limited (HIDCL) have also started to invest in hydropower projects. The Nepal Rastra Bank (NRB) has a mandatory provision requiring banks to invest at least 12 percent in agriculture and hydropower. A few investors say banks have opted for hydropower sector with investment options shrinking due to the earthquake and Indian blockade.
Himalaya Hydropower has signed investment agreement of Rs 1.30 billion with Nepal Bangladesh Bank, Siddhartha Development, Kailash, Kasthamandap and Triveni development banks under leadership of Janta Bank to develop Namarjun Madi. Dordikhola Hydropower Company Limited under CEDB Hydro and Fund Limited has signed agreement of Rs 1.40 billion with Laxmi, Agricultural Development Bank and Nepal Bank under leadership of Sanima Bank for Dordi 1.
Nyadi Hydropower Limited under Butwal Power Company (BPC) has signed investment agreement of Rs 4.40 billion with Everest, Nabil, Global IME, Himalayan, Sunrise and HIDCL to develop Nyadi Hydropower. People’s Hydropower has signed investment agreement of Rs 5.80 billion with Global, Everest, Prabhu and Rastriya Banijya Bank under leadership of Nabil Bank to develop Super Dordi.
Upper Hewa Hydropower, similarly, has signed investment agreement of Rs 986.50 million with Nepal Bank and Agricultural Development Bank under leadership of NMB Bank to develop Hewakhola. Investment agreement of Rs 2.85 billion has also been signed with half a dozen institutions including Global, Nepal Bank, Prabhu and NMB under leadership of Nepal Investment Bank for Upper Dordi A to be developed by Liberty Hydropower.
Investment agreement of Rs 1.90 billion has also been signed with Global and Century under leadership of Civil Bank for Singatikhola. Likewise, financial institutions have also signed agreement for Lower Hewa, Ghattekhola and Rupsekhola, according to the department.
President of the Independent Power Producers’ Association, Nepal (IPPAN) Khadga Bahadur Bista said investment in hydropower sector is rising as it seems attractive in comparison to other sectors. “Banks have started to invest in hydropower deeming that long-term market is good as there is excess liquidity in the market and short-term investment can create instability,” he added.
Chairman of Nepal Bankers Association Upendra Poudyal said investment in the sector has increased with the expansion in capacity of banks. “Banks are ready to invest in hydropower. But the promoters must also maintain financial discipline,” he added. He stated that it is easier for banks to invest now due to high liquidity with them.
Source : Karobar Daily