Loan to Nepal soon: EXIM Bank of India

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    KATHMANDU, APR 18 –

    Exim Bank of India-ProjectOne and half years after the signing of an agreement with Nepal, EXIM Bank of India has finally confirmed that it will soon release a Line of Credit worth $250 million to Nepal to finance infrastructure projects here.

    Energy Secretary Hari Ram Koirala said that he received an email from Radhika Lokesh, joint secretary at the India’s Ministry of External Affairs, on Tuesday, confirming the release of committed amount.

    “In her email, Lokesh has assured that the Line of Credit will be released at the earliest without fixing the date,” said Koirala.

    Nepal government and Exim of India Bank signed the agreement on October 21, 2011 in New Delhi during the visit of the former Prime Minister Baburam Bhattarai.

    Under the agreement, the loan is supposed to be used in eligible machinery, equipment, goods and services including consultancy services for the purpose of infrastructure projects such as highways, airports, bridges, irrigation, roads, railways and hydropower projects in Nepal. The government has decided to use the pledged amount in hydropower, transmission line and road projects.

    While the credit agreement was supposed to come into effect from June 29, 2012, the release of the amount was delayed after the Nepal government failed to submit the progress report of projects that are due to be financed under the Indian aid.

    “The government has already submitted the progress report, including detailed project reports, of most of the projects to be built with the Indian aid,” said Koirala. The government, however, is yet to submit the detailed project report of Modi-Lekhnath 132 KV Transmission Line.

    After reviewing the DPR, a delegation from EXIM Bank of India led by Lokesh had last week held a meeting with officials of Finance, Energy and Physical Infrastructure ministries, among others.

    “The delegates, during the meeting had assured to release the loan at the earliest,” added Secretary Koirala.

    As per the agreement, India will provide loans for 30 years at 1.75 percent interest per annum and Exim had written to the ministry on June 29, 2012, stating that the loan has come into effect.

    The government plans to spend $ 170 million on hydropower and transmission line projects, while the rest of the amount will be spent on the road and other infrastructure projects.

    As per the agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the rest (other than consultancy services) may be procured from outside India.

    “However, at the request of borrower and with the approval of Government of India, Exim Bank may consider reduction in the Indian content,” the Reserve Bank of India stated on its website.

    According to ministry officials, there has been a difference between the two sides over the use of Indian materials for the construction of projects to be financed by Indian bank.

    “Though we have asked the Indian side to reduce the use of Indian materials to 50 percent, it is yet to be settled,” said the ministry official.

    Construction of around half a dozen transmission lines has not moved ahead due to delay in sanctioning of the credit. The Nepal Electricity Authority (NEA) has not been able to sign Power Purchase Agreement with four hydropower projects to be built in Solu and Koshi corridor due to uncertainty about construction of the transmission lines.

    Source : The Kathmandu Post