Japan resumes soft loan after 11 years hiatus

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    jica_JapanKATHMANDU: After 11 years hiatus, the Japanese government has pledged to provide a soft loan for the Tanahu Hydro Power Project, which would be the country’s largest storage-type hydro project if all goes as planned.

    Japan International Cooperation Agency (JICA) and the government of Nepal are scheduled to sign an agreement on Wednesday for providing the ODA loan (Official Development Assistance) worth US $180 million, said the Ministry of Finance today.

    Earlier, JICA provided soft loan for the Melamchi Water Supply Project some 11 years ago, however, the project is still in limbo owing to various reasons. The interest rate is 0.01 percent and the loan repayment period is 40 years for the hydro project.

    Joint Secretary Madhu Kumar Marasini at the Ministry of Finance described the new agreement as a ‘good gesture’ for Nepal. “Either we had failed to convince for such loans or the Japanese government was looking for a more stable period in the country,” he reasoned, for the 11 years interval in JICA’s soft loan.

    Masataka Nakahara, Director General of JICA South Asia Department, will arrive in Kathmandu on Monday to sign the agreement, JICA Nepal said today. The neighbouring countries like India and Bangladesh have several projects on JICA’s soft loan currently.

    The project worth US $500 million will be co-funded by the Asian Development Bank, JICA, European Investment Bank and Abu Dhabi Fund for Development and a part of it is to borne by the Government of Nepal.

    The country’s only storage project Kulekhani Hydro Power Project and Kaligandaki A, the country’s highest capacity project at present, were constructed on the soft loan of the Japanese Government earlier.

    It is learnt that the low purchasing power and sluggish economy of the country were keeping the Japanese government from providing the soft loans. However, at a time when hydro projects have caught the limelight again, they have chosen to finance the project.

    The project’s capacity is 140 MW and the commissioning date is slated by 2020 December. “This project involves water storage during the wet season and operates minimum six hours a day in the dry season when the power demand is at its peak. Though expensive, it could be a replacement for the costly diesel plants in future,” said Mahesh Acharya, chief of the Tanahu Hydro Power Project.

    It is also noted that a master plan study to select some 10 promising reservoir-type projects for the country is underway in assistance of the JICA Nepal.
    Source : Himalayan Times,