Tripartite loan agreement signed for 42MW Modi A Hydropower project

KATHMANDU: The financial management of the 42-megawatt Modi A Hydropower Project, being constructed in Annapurna Rural Municipality of Kaski through the subsidiary of the Nepal Electricity Authority, has been arranged.

The estimated cost of the project, including construction period interest, is NPR 10.57 billion, with 70% funded through loans and 30% through equity. The equity will be contributed by the Authority and the general public.

NMB Bank and Hydroelectricity Investment and Development Company Limited (HIDCL) are jointly providing a loan of NPR 7.40 billion with interest for the project. Out of the total loan, NPR 4.40 billion will be from NMB Bank, and HIDCL will contribute NPR 3 billion.

During the program on Monday, in the presence of Minister for Energy, Water Resources, and Irrigation Shakti Bahadur Basnet, a tripartite loan agreement was signed between Modi Hydropower Company Ltd., NMB Bank, and HIDCL.

Minister Basnet explained that the domestically produced electricity would not only contribute to the internal consumption but also enhance exports to India and Bangladesh. He highlighted the government’s efforts to ensure fair dealings and proper practices in the electricity sector.

Secretary of the Ministry of Energy, Water Resources, and Irrigation, Gopal Sigdel, informed about the ongoing discussions and plans for expanding and strengthening the existing infrastructure for electricity trade between Nepal and India.

Kulman Ghising, Executive Director of the Authority and Chairman of Modi Hydropower Company, expressed confidence in completing the construction of various hydropower projects, including the 42-megawatt Modi A Hydropower Project, within the stipulated time frame. He emphasized the Authority’s commitment to achieving its goal of producing 10,000 megawatts of electricity in the next ten years and exporting it to the Indian market.

Arjun Gautam, CEO of HIDCL, praised the historical opportunity for private banks to invest in the project and lauded the progress made in the construction of Modi A Hydropower Project within a short period.

The Modi A Hydropower Project, with a construction period of four years, aims to be completed soon. The bidding process for civil and hydromechanical works under Package-1 has been initiated, and technical proposals submitted by bidders are currently under evaluation.

The project site office and camp construction are already underway, and approvals for private land acquisition and forest area use have been obtained. The Authority has also entered into an agreement with an engineering company for construction supervision consultancy.

Sunil K.C., Chief Executive Officer of  the NMB Bank commended the Authority for advancing the project and considered it a historic opportunity for private banks to participate in its financing.

K.C., highlighted the bank’s pivotal role in championing sustainable initiatives, allocating approximately 18% of their investments to the green energy sector, including hydropower and renewable energy. Stressing their commitment to environmentally conscious projects, he revealed the completion of investment agreements with 46 hydropower projects in Nepal, with plans for further expansion in the coming year.

Emphasizing the significance of renewable energy, K.C. underscored its minimal environmental impact compared to conventional sources, making it a crucial ally in mitigating the adverse effects of climate change. NMB Bank’s proactive stance in fostering green energy projects aligns with their dedication to both financial growth and environmental responsibility, contributing to Nepal’s sustainable energy landscape.