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GMR Group has entered into a Project Development Agreement with the Nepal Government for the 900-MW Upper Karnali Hydro Power Project.
The agreement was signed late last week in the presence of Nepal Prime Minister Sushil Koirala and Union Home Minister Rajnath Singh, among others.
The project agreement was signed after due approvals from the Board of Investment Board of Nepal and the Nepal Cabinet. This is the largest FDI for Nepal and also the largest investment for GMR Group outside India.
The Upper Karnali Hydro Power Project was awarded to the GMR Group through an International competitive bidding process in 2008. The project entails an investment of about Rs 9,000 crore.
Located on Karnali river, in the Surkhet, Dailekh and Achham districts of Nepal, the 900-MW project is to be constructed in about five years.
The power generated, net of free power and power supply to Nepal, if any, is planned to be evacuated through a 400 kV double circuit transmission line up to the interconnection point of Power Grid Corporation of India (PGCIL) in India.
G M Rao, Group Chairman of GMR Group, in a statement said, “The signing of the Project Development Agreement for the Upper Karnali Hydro Power Project reinforces the strong ties between India and Nepal. The development of the Upper Karnali project will be beneficial for both countries leveraging on each other’s strengths and resources. We are committed to the development of the project and the betterment of the communities in the region.”
The financial closure of the project (long-term tie-up of debt and equity capital) is expected to be achieved before September 2016 and thereafter the commencement of the commercial operation is expected by September 2021.
GMR Group will be exploring strategic/long-term capital tie-up of both debt and equity for the project at an appropriate time.
The project is expected to generate about 3,500 million units (MUs) of energy annually and 420 MUs of energy (12 per cent of installed capacity) has been earmarked as free power to Nepal.
The Nepal Electricity Authority will hold 27 per cent free equity stake in the project, including all project royalties, and the 100 per cent ownership of the project will be transferred to the Government of Nepal, at the end of the 25-year concession period.
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