Kathmandu: The 51st meeting of the Investment Board Nepal (IBN) has decided to recommend to the Council of Ministers to extend the term of the 900 MW Upper Karnali Hydropower Project to arrange for financial management within 24 months.

A meeting of the IBN chaired by Prime Minister Sher Bahadur Deuba on Monday decided to recommend to the Council of Ministers to extend the deadline by two years for the project's developer, Indian company Grandhi Mallikarjuna Rao (GMR) Group.

Even after eight years of signing the Upper Karnali Hydropower Project Development Agreement (PDA), GMR has not been able to carry out important functions including power purchase, sale agreement and financial management of the project. The Investment Board and the GMR had reached a PDA on September 19, 2014 to complete the project within seven years.

According to the agreement, the target was to complete the PPA and financial management of the project within two years and complete the construction within the remaining five years.

Even eight years after the signing of the PDA, GMR has not been able to manage the power purchase agreement and financial management of the project, let alone the construction.

However, a recent meeting of the IBN has recommended to the government to extend the project conditionally for two years only three years after the expiration of the project deadline. The Investment Board had not extended the deadline of the project from September 2018.

The government had formed a task force under the coordination of Vice-Chairman of the National Planning Commission, Bishwo Poudel, on October 9 to study whether to extend the term of the Upper Karnali Hydropower Project. Based on the report given by the task force, the Upper Karnali project has been proposed to be extended for two years with conditions.

Similarly, the 51st meeting of the IBN has decided to resume the negotiation process with the Motrex Company Limited for Vehicle Manufacturing and Assembling Plant Project Development.

The meeting also approved a total investment of Rs 25.92 billion for the construction and development of two hydropower projects. Of which, Rs 16.45 billion has been allocated for the 99.8 MW Tamakoshi-5 Hydropower project, to be built in Dolakha and Rs 9.47 billion for the 40 MW Rahughat Hydropower project.

In the meeting, Prime Minister Deuba emphasized on developing reservoir-based projects in the hydropower sector and directed the officials to adopt environment-friendly technologies in line with Nepal's international commitments while developing and operating the projects.