Irrigation, hydro, road get priority--$1 billion indian line of credit

KATHMANDU, NOV 10 -

The government will use the $1 billion line of credit—announced by Indian Prime Minister Narendra Modi during his Nepal visit in August—in hydropower, irrigation and road projects.

The projects include 600MW Budhigandaki Hydroelectric Project, Mahakali III Irrigation Project, Koshi Pump Canal and a few road projects, according to Finance Ministry officials. A multilane motorable bridge over the Mahakali River in Mahendranagar is another potential project, in which the Indian loan could be used.

“Hydropower and irrigation projects have almost been finalised, but the road projects are yet to be confirmed,” said a ministry official.

Finance Minister Ram Sharan Mahat said around half of the fund will go to Budhigandaki, a reservoir-type hydropower project, which the government is developing under the development committee model. “It is the only hydropower project that can be implemented at the earliest,” he told the Post recently.

The project’s updated feasibility study is in final stages of completion. France’s Tractebel Engineering recently submitted a draft of the study, which, according to a project official, has suggested increasing the project’s capacity to around 1,000MW. The project is situated in Gorkha and Dhading districts. “After the final report is submitted, its

detail engineering design will be prepared and the construction will begin immediately if necessary resources are arranged” said the ministry official.

Budhigandkai Hydroelectric Project Development Committee member Keshab Dhoj Adhikari said the project would cost over $2 billion.

The proposed irrigation projects are also in need of resources.

Madhav Prasad Regmi, secretary at the Ministry of Irrigation, said they have sought funding for Mahakali III and Koshi Pump Canal. According to the Irrigation Ministry, Mahakali III needs Rs 16.5 billion for completion. “Necessary documents have already been prepared and the project is ready for implementation,” said Regmi.

As far as the Koshi Pump Cannel project is concerned, this old structure needs renovation. “As it is not operating in full capacity, we need to renovate it,” said Regmi.

The Saptari-based project, originally meant to irrigate 12,000 hectares of land, supplies water to only around 5,000 hectares. According to the irrigation ministry, this project needs Rs 3.3 billion to make it operate in full capacity.

For the motorable bridge over Mahakali, the Indian government had assured to assist the construction during Modi’s Nepal visit.

The bridge will facilitate smooth traffic along the East West Highway and establish a vital trade and transit linkage between Nepal’s Far-western Region and Indian cities of Uttar Pradesh, Delhi and Uttarakhand.

On the biggest ever loan India has so far offered, it will charge just 1 percent interest, while the commitment charge has been reduced to 0.25 percent from 0.5 percent in previous credits. India will not charge any service fee. Earlier, it charged  0.25 percent.

The southern neighbour has also been liberal in setting other conditions, according to the ministry. “As per previous conditions, Indian contractors should mandatorily have had involvement in the projects, but this time, joint-ventures with Nepali contractors have also been approved,” said the official.

An Indian delegation led by Sujata Mehta, secretary at the Indian External Affairs Ministry, who looks after the Development Partnership Administration, visited Nepal last week and concluded the terms and conditions for the credit line, according to ministry officials.

Source: The Kathmandu Post