Promoter of the Upper Karnali Hydropower Project GMR has applied for extension of the deadline for financial closure for the third time.
The Indian company had signed project development agreement (PDA) in 2014 with a provision requiring it to complete financial closure in two years. But it has not been able to do so even after two extensions by a year each.
The second extension granted by the Investment Board Nepal (IBN) expired on Tuesday. IBN Spokesperson Joint Secretary Uttam Bhakta Wagle told Setopati that GMR had applied for another extension a few days before the deadline expired.
GMR has signed an agreement to sell 500 MW of electricity generated from Upper Karnali TO Bangladesh but it has not been able to sign power purchase agreement (PPA) which specifies the rate of purchase as India is reviewing its policy for cross-border trade of electricity.
Indian had prepared draft keeping provision prohibiting purchase from a project with non-Indian investment. Nepal and Bhutan had commented on that draft and India has yet to give final touch to that draft.
GMR has sought an extension this time stating that banks have refused to lend citing that provision. Spokesperson Wagle said the next IBN meeting will discuss the GMR's application. "The issue was not on the agenda of Tuesday's meeting. Extension was granted a few months later even last year. The next meeting around a month later may decide on that," Wagle stated.
The 900 MW project to be developed in Dailekh, Surkhet and Achham districts is expected to cost Rs 112 billion. Nepal will get 108 MW of free electricity 27 percent of free equity from the project.
The IBN, meanwhile, has formed a committee including Finance Minister Yuba Raj Khatiwada, Energy Minister Barsha Man Pun and Chief Executive Officer (CEO) of IBN Maha Prasad Adhikari to discuss the modality for development of West Seti Project after the China Three Gorges Corporation (CTGC) withdrew from the 750 MW project saying the project is not fit for investment. "The committee will submit report in the next meeting of IBN," Wagle added.
The company said the project is not financially viable despite Nepal agreeing to slash capacity of the project and sign PPA in US dollars for 12 years. The CTGC was not assured even after the government expressed commitment to resolve the problems of transmission line and other practical problems cited by the company.
