Signing ceremony of Financing Agreements for Upper Trishuli-1 Hydropower Project


Nov 02, 2019

Kathmandu: 1st Nov, 2019 / Nepal Water and Energy Development Company Private Limited (NWEDC) signed Financing Agreements with International Finance Corporation (IFC), Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Export-Import bank of Korea (K-EXIM), Korea Development Bank (KDB),  CDC Group PLC (CDC), Netherlands Development Finance Company (FMO), PROAPRCO Development Financial Institution (PROPARCO), and The OPEC Fund for International Development (OFID) for the loan financing of Upper Trishuli-1 Hydropower Project amidst a special Signing Ceremony organized at Radisson Hotel, Kathmandu today. While arranged by IFC, the loan agreements were signed to provide a total loan amount of USD 453.2 million for the Upper Trishuli-1 Hydropower Project. The loan amounts in USD signed with each of IFC, ADB, AIIB, K-EXIM, KDB, CDC, FMO, PROPARCO and OFID are 161.3 million, 60 million, 39.6 million, 100 million, 30.8 million, 21.9 million, 15.4 million, 11 million, and 13.2 million, respectively. The Bank of New York Mellon (BNY) as the Offshore Account Bank and Nepal Investment Bank (NIB) as the Onshore Account Bank were also parties to the Financing Agreements.

Hon. Dr. Yuba Raj Khatiwada, Minister for Finance and Hon. Mr. Barshaman Pun ‘Ananta’, Minister for Energy jointly witnessed the signing ceremony. The ceremony was also attended by more than 200 representatives from several Government entities like MOF, MOE, DOED, NEA, NERC, NRB, IBN, the Sponsors, Lenders, and local stakeholders.

NWEDC is the special purpose company established by the Project’s sponsors and shareholders for the development of Upper Trishuli-1 Hydropower Project. The Sponsors of the Project are Korea South East Power Co. Ltd. (KOEN), Daelim Industrial Co. Ltd., and Kyeryong Construction Industrial Co., Ltd., and IFC and a local partner will also be shareholders. The equity shares up to 10% will be allocated for project affected people as per local shares provision in Project Development Agreement itself. The Main Sponsor, KOEN is a Korean government-owned power generation company which owns and operates more than 10,000 MW of power plants in Korea.

The Upper Trishuli-1 Hydropower Project, located in Rasuwa, will generate annual energy of 1,533 GWh from three power generating units of total installed capacity 216 MW. 38.75% of the total annual energy will be generated in dry season whereas the remaining 61.25% of energy will be generated in wet season. The delivery point of such energy generated is the under-construction Trishuli-3B Hub substation in Nuwakot. The project components include 29.5m high dam in Trishuli river, 9.7km long headrace tunnel, 292m high vertical pressure tunnel and an underground powerhouse. The project is located near the Kathmandu load centre and can provide a firm power of 104 MW all round the year. Upper Trishuli-1 is the first project in South Asia to successfully complete the process of Free Prior Informed Consent (FPIC) from the local indigenous people in the project area. FPIC is expected to help create a social license for successful project construction and operation.

The Project Development Agreement (PDA) of the project was signed between the Government of Nepal and the Company on 29th Dec 2016. The Power Purchase Agreement (PPA) was signed between the Company and Nepal Electricity Authority (NEA) on 28th Jan, 2018 based on the posted rate of NEA. In accordance with the Energy Emergency Action Plan and the USD PPA guidelines of the Government, the PPA includes a provision of Dollar payment only for the loan portion for the first 10 years, and such Dollar payment has been hedged through a Hedging mechanism where the Company will contribute one third of the hedging costs through Free energy to NEA.

The construction of the project will be done based on a fully wrapped EPC Contract. A Joint Venture of internationally renowned Korean companies – Daelim Industrial Co. Ltd. and Kyeryong Construction Industrial Co., Ltd. will carry out the main construction works. NWEDC aims to start the main construction of the project in 2020 after the approval of the Financing Agreements by the Nepal Rastra Bank and after the fulfilment of other conditions in the signed Financing Agreement documents. The scheduled construction period of the project is 5 years. The pre-construction works including access road, construction camp Facilities, and Bailey bridge are currently ongoing.