The Nepal Water and Energy Development Company (NWEDC) today inked a financing agreement with nine international lenders — International Finance Corporation (IFC), Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Export-Import Bank of Korea (K-EXIM), Korea Development Bank (KDB), CDC Group PLC (CDC), Netherlands Development Finance Company (FMO), PROAPRCO Development Financial Institution (PROPARCO) and the OPEC Fund for International Development (OFID) for loan financing of Upper Trishuli-1 (UT-1) Hydropower Project amounting to $453.2 million.

NWEDC is the developer of the 216-megawatt project in Rasuwa district. The loan amount signed with IFC is $161.3 million; $60 million with ADB; $39.6 million with AIIB; $100 million with K-EXIM; $30.8 million with KDB; $21.9 million with CDC; $15.4 million with FMO; $11 million with PROPARCO and $13.2 million with OFID.

Prime Minister KP Sharma Oli, through a video message at the agreement signing ceremony, said that development of the UT-1 hydropower project will not only ensure electricity access to millions of people but will also prove crucial to support the government’s plan to end poverty and foster the economy. “The government urges foreigners to invest in such mega projects wholeheartedly,” he added.

Similarly, Minister for Energy Barsha Man Pun said that the project is among the game-changer projects of the country. “Not only will the project power hundreds of thousands of homes and businesses, it will also serve as an example of how private companies can help Nepal expand its hydropower sector and attract much needed foreign direct investment,” he stated.

On the occasion, Bo-seuk Yi, chief executive officer of NWEDC, said, “There is no question that Nepal has the potential to be an energy powerhouse. To realise that promise, Nepal can enlist the help of private companies, which have the capital and expertise to make major projects a reality,” he said.

Speaking at the programme, Shantanu Chakraborty, director of infrastructure finance, South Asia, Central Asia, and West Asia at ADB’s Private Sector Operations Department, said that the agreement is a landmark transaction that will provide strong incentives for further private sector investment in Nepal’s energy sector.

To ensure it provides sustainable benefits, Chakraborty said that this project will adopt international best practices in safeguards management and will also introduce measures to promote gender equality, including job opportunities for women and better access to education, health care, amenities, and infrastructure.

Meanwhile, Mengistu Alemayehu, IFC director for South Asia, said that this project represents a significant milestone in the development of Nepal’s hydropower potential as it has been able to attract meaningful private sector participation, particularly from international investors.

The UT-1 hydel project will generate 1,533 GWh of power annually from three power generating units with total installed capacity of 216 megawatts. While 38.75 per cent of the total annual energy will be generated in dry season, remaining 61.25 per cent of energy will be generated in wet season. The delivery point of such energy generated is the under-construction Trishuli-3B hub station in Nuwakot. The project component includes 29.5-metre high dam in Trishuli river, 9.7-km long headrace tunnel, 292-metre high vertical pressure tunnel and an underground powerhouse.

Upper Trishuli-1 is the first project in South Asia to successfully complete the process of Free Prior Informed Consent (FPIC) from the local people in the project area.

The project development agreement of the project was signed on December 29, 2016 while the power purchase agreement between NWEDC and Nepal Electricity Authority was inked in January 2018.

The construction of the project will be done based on a fully wrapped engineering, procurement and construction (EPC) contract. A joint venture of Korean firms — Daelim Industrial Co and Kyeryong Construction Industrial Co — will carry out main construction works of the project.