KATHMANDU: GMR Group on Monday announced the signing of an agreement with the Nepal government for development of the 900 Mega Watt Upper Karnali hydro-electric project, in what could be the country’s largest foreign direct investment and GMR Group’s largest investment outside India.
The agreement for setting up the Rs9,000-crore project was signed late last week in the presence of Nepal Prime Minister Sushil Koirala and India’s minister of home affairs Rajnath Singh, among others.
This is the largest FDI for Nepal and also the largest investment for GMR Group outside India, GMR stated in a release.
The project has received due approvals from the Board of Investment Board of Nepal and the Nepalese cabinet, GMR said.
GMR won the contract for executing the project through an international competitive bidding process in 2008.
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 project, being developed as an export-oriented unit on a build-operate-own-tranfer (BOOT) basis, is located on Karnali river, in the Surkhet, Dailekh and Achham districts of Nepal.
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.
”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,” G M Rao, group chairman of GMR Group, said
GMR expects the financial closure of the project to be achieved within 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 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.
The Upper Karnali project once completed will benefit Nepal and India by way of energy security, industrial growth, improvement of job opportunities in Nepal, promoting community development through various initiatives, upgradation of health and educational institutions and improvement of communication and transportation facilities, thereby giving a boost to the economic growth of the country. (domain-b)
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