Thursday, April 24, 2014 08:59 AM

Nepal asks China for $633m to build Upper Arun, Tamakoshi

KATHMANDU, SEP 20 -

The government has requested the Chinese government to provide a soft loan of US$ 633 million to develop two projects, 335 MW Upper Arun and 87 MW Tamakoshi. The Finance Ministry has written to the Chinese government asking for the money as per the recommendation of the Nepal Electricity Authority (NEA).

The request for the soft loan was made as per the interest shown by the Chinese government to invest in one of the two hydropower projects in Nepal.

Finance Ministry officials said that the Chinese government had asked the ministry to identify one of the two appropriate projects for the credit. The Foreign Aid Division of the ministry had asked the NEA to propose two projects mentioning that the Chinese government was willing to provide a soft loan through China Exim Bank.

Ministry officials, however, said that though the request for the soft loan had been made, its interest rate has not been determined.

“Once the Chinese side approves our request for the soft loan, negotiations will be held to fix the interest rate,” said a source at the Finance Ministry.

“As per the Finance Ministry’s request, we have recommended the Upper Arun and Tamakoshi V projects which will be significant in reducing the growing hours of load-shedding,” said Ram Chandra Pandey, general manager of the Generation Construction Division at the NEA.

He also said that these two projects had been recommended for the soft loan as their feasibility studies have been completed. “After the Finance Ministry sent the names of these two projects, the Chinese government has been learned to be positive to finance their construction.

Previously, the NEA had requested the Ministry of Energy (MoE) to finance these two projects in September 2012. NEA officials said that if the Chinese government approves the loan request, the transmission line for the projects could also be developed from it. The NEA has been planning to develop the projects on its own after the loan request is approved.

As per the proposal of the Finance Ministry, the Chinese Exim Bank will provide 85 percent of the requested amount while the government of China will provide the rest.

The NEA had carried out a feasibility study for both these run-of-the-river (ROR) projects in 1999. “We have already asked the MoE for permission to develop the projects on our own,” added Pandey.

The Upper Arun Hydropower Project lies in Sankhuwasabha district in the Eastern Development Region. It has a firm capacity of 250 MW which is about 75 percent of the installed capacity. The total cost of the project is estimated to be US$ 500.79 million.

“This project will add 2,050 GWh of energy annually to the national power grid which will be a milestone to fulfil the power demand of the load centres of the Eastern Region minimizing transmission loss, according to a report of the feasibility study. The construction duration of the project will be four and a half years.

Meanwhile, the total project cost of Tamakoshi V is estimated to be US$ 131.99 million, and it will take four years to be completed.

This cascade project is located in Dolakha district of Janakpur Zone in the Central Development Region. The total power generation of this project will be 428.26 GWh per year.

Posted on: 2012-09-20 08:59


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