Funding for Nepalese Hydropower

INTERNATIONAL Finance Corporation (IFC) has partnered with India’s GMR Group to develop the 900 MW Upper Karnali hydropower plant, and two transmission line projects in Nepal.

The transmission projects will evacuate power from the Upper Karnali and 600 MW Upper Marsyangdi Hydropower projects in Nepal. IFC InfraVentures, a global infrastructure project development fund, is a co-developer of these projects. IFC will make investments for project development and help achieve financial closure for these projects, which have a total investment outlay of $1.7 billion.

The Upper Karnali plant will create over 3,000 jobs and help reduce greenhouse gas emissions of nearly 2 million tons of carbon dioxide equivalent annually. According to the joint development agreement, 12% of the power generated from the Upper Karnali project will be provided free of cost to Nepal.  

"This is the very first project for which the Project Development Agreement was executed by the Investment Board,” said Radhesh Pant, Chief Executive Officer, Investment Board Nepal. “IFC's expertise in the international financial markets brings complementarity and synergy to GMR's strengths in regional infrastructure. IFC's involvement will help the project achieve timely financial closure, construction, and operational milestones.”

“IFC’s financing and global expertise in the hydro sector will help the projects become a game changer for Nepal’s hydropower sector and will attract international investors,” said G. M. Rao, Group Chairman, GMR Group. “The development of these projects complements the initiatives taken by India and Nepal to establish high-capacity cross-border transmission links to facilitate power trading between the two countries.”

Nepal has significant hydropower potential but less than 1% of it is developed. Only an estimated 46% of the population has access to electricity. Over the last decade, demand for power in Nepal has grown at 9% annually, while supply has not kept pace.

“Hydropower is a powerful engine for economic growth in Nepal,” said Vivek Pathak, IFC Director - Asia Pacific. “These projects will boost a common energy market in South Asia, create sustainable employment, improve quality of life, and provide reliable and clean energy for local industry.” 

Picture of Karnali River, Nepal by Sherparinji reproduced under CCL.

Tuesday 23rd December 2014

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