Govt exploring ways to disburse soft loans to hydel projects
KATHMANDU, JUN 07 -
A High-Level Financial Sector Reform Coordination Committee, headed by Finance Minister, on Wednesday decided to form a taskforce to study ways to ensure necessary resources for the hydropower projects that are at the final phase of construction.
The committee decided to form a taskforce under the coordination of Nepal Rastra Bank (NRB) Deputy Governor Maha Prasad Adhikari with joint secretaries from the Finance and Energy Ministries and directors of the Nepal Electricity Authority and Department of Electricity Development as members.
Finance Ministry sources say there has been understanding of providing Rs 2 billion to these projects.
Introducing Load Shedding Reduction Action Plan in February, the government had announced four types of incentives, including availability of loans at concessional rate. Hence, the committee decided to form the taskforce to suggest on how to provide the pledged support. The Action plan had also raised the power purchase agreement (PPA) rate, waiving value added tax on construction materials and delay charges.
Finance Ministry Spokesperson Rajan Khanal said that the taskforce was formed to explore ways on mobilising the pledged resources to the hydropower projects to ensure their completion as soon as possible and help reduce load shedding hours.
The government has pledged loans upto Rs 20 million per megawatt to independent power producers at the rate that has so far been reserved to the NEA. The NEA has been taking loans from the government at an average interest rate of 8 percent.
According to Khanal, the Energy Ministry has already recomended the names of seven such hydropower projects for the pledged resources and exemption in VAT on construction materials. “Energy Ministry has informed us that other projects are also seeking the pledged support,”
he said.
A total of 26 such projects will get waiver on VAT on construction materials and the delay charge if they complete the projects within April 2015. However, the Finance Minstry has some reservations over providing VAT exemption on construction materials on ground that similar incentive was misused in the past when the govenrment provide such facility to some foreign aided projects.
Instead, the Finance Minstry has proposed providing grant worth Rs 1 million per megawatt to such projects as per the decision taken by the government led by Jhala Nath Khanal. “We have already proposed our readiness to provide Rs 1millon in grant to such projects and asked the Energy Minstry to go ahead accoridingly,” said Shata Raj Subedi, joint secretary at the Finance Minstry. The government has given exempetion on VAT on imports of machinary for hydropower projects through the budget.
In another decision, the committee also decided to form a taskforce under the coordination of joint secretary at public enterprises coordination division of the Finance Ministry to study on lease period of Bhaktapur Brick Factory.
Source: The Kathmandu Post
