The 70-megawatt Dudhkoshi-2 (Jaleshwar) Hydropower Project, which is to be built in Solukhumbu, Kathmandu, has now come fully under Nepali ownership.

“The ‘Dudhkoshi Hydropower Nepal Pvt. Ltd.’, which was under the ownership of India’s M/S Dudhkoshi Hydropower Pvt. Ltd., has been purchased by a group comprising High Himalaya Hydro Construction, Puwakhola-1 Hydropower, and Aayu Myalung Hydropower. The Indian company sold it after failing to secure the necessary financial resources for project construction.”

“The Dudhkoshi-2 project had obtained its construction license on September 23, 2020. The new promoter group is preparing to complete financial arrangements within August–September and begin construction from Kartik October–November. For this, the group is raising about Rs. 10.5 billion in loans through banks. The project has also undergone a credit rating through ICRA Nepal (Infomerics Credit Rating Nepal) for the loan.”

On November 22, 2021, a long-term power purchase agreement (PPA) was signed with the Nepal Electricity Authority for the sale and purchase of 70 megawatts of electricity for a period of 30 years. As per the agreement, electricity will be sold at Rs. 4.80 per unit during the monsoon season, Rs. 8.40 per unit during off-peak hours in winter, and between Rs. 8.50 to Rs. 10.55 per unit during peak hours. For the first eight years, the provision of an annual 3 percent escalation in the tariff has been included.

The estimated cost of the project is Rs. 15 billion, which will be financed in a debt-to-equity ratio of 70:30. Accordingly, Rs. 10.5 billion will be raised as long-term debt, and Rs. 4.5 billion as equity.

The electricity generated by the project will be connected to the Tingla substation through a 12-kilometer-long 132 kV transmission line. The company believes that this will ensure an unobstructed evacuation of power.

As this project is based on a peaking run-of-the-river model, it will have the facility to sell electricity at higher rates for up to six hours daily during peak hours in the dry season. This is expected to strengthen the company’s revenue potential.

Source: Biz Nepal