PFC to invest Rs 75 b on Arun III

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    KATHMANDU, Dec 29

    Power-FinancePower Finance Corporation (PFC) of the Indian government will invest Rs 75 billion in the proposed Arun III Hydropower Project. PFC has expressed investment commitment during a dialogue with promoter of the project SJVN Limited of India to arrange investment for the project.

    Country Director of SJVN HR Subedi said PFC has agreed in principle to invest in the 900 MW project. “It is certain that we will take loan from PFC. We just need to sign formal agreement,” he added. Both SJVN and PFC are government-owned institutions of India. The estimated cost of Arun III is Rs 104 billion. SJVN will make equity investment of Rs 25 billion while PFC and Nepali banks will make arrangements for the rest of the investment. Subedi revealed that SJVN is preparing to borrow Rs 4 billion from Nepali banks as well. He claimed there will not be problems in making investment as PFC has over IRs 300 billion.

    Electricity generated from Arun III will be procured by Power Trade Corporation (PTC). Door for export of electricity to Nepal from India has been opened following signing of Power Trade Agreement (PTA) between India and Nepal. “SJVN has initiated dialogue with PFC for investment and with PTC for selling electricity simultaneously. We will invite bids for construction of dam in the first lot of civil construction by October,” he said. He contended that there will not be any problem in making investment arrangements and for market for the generated electricity as PFC, PTC and SJVN are all government-owned institutions.

    He said work for the project will start ahead of schedule if land acquisition and forest works were completed in time. The project development agreement (PDA) signed between the Investment Board and SJVN states that the government will assist in land acquisition. SJVN will have generation license for 25 years. Nepal will receive benefits worth Rs 348 billion during those 25 years through free electricity, tax and other benefits. SJVN aims to make investment arrangements within two years of signing PDA, complete pre-construction works including making market arrangements for the electricity to be generated, and complete the project by 2021. The locals affected by the project will be allocated six percent (8 million units) shares. The company will also carry out free electrification of six village development committees (VDC) affected by the project.

    Nepal will receive 21.9 percent (118 MW, 860 million units a year) of free electricity from the project. The detailed project report (DPR) has showed that the project will generate 3.92 billion units of electricity annually. The company will get value-added tax (VAT) grant of Rs 4.50 billion, complete waiver of taxes for 10 years and 50 percent waiver for the next five years if the project is completed by 2023.

    SJVN was awarded the project in 2008 after a free competition when it proposed to give the highest quantity of electricity. It has already prepared the DPR and the environmental impact assessment (EIA) and submitted them to the government in the six years. Resettlement will be done as per the standards set by the World Bank (WB) and the International Finance Corporation (IFC).

    The project will be developed on Arun river that separates Sankhuwasabha and Bhojpur districts. The dam will be built in Num and Pathibhara VDCs, and the power house in Dijing VDC. An 11-kilometer tunnel will be constructed from the dam to power house.

    Source : Karobar Daily