Nepal ready to attract $6bn investment
KATHMANDU,JUNE 15:
The meeting of the Investment Board today approved the new Project Development Agreement (PDA) template for hydropower projects above 500MW that will not only ensure investments worth $6 billion but also solve current power crisis and generate employment in the country.
The agreement –– drafted by one of the world’s leading legal firms –– ensures balanced and bankable deals that fully benefit and protect Nepal’s interests. The caretaker prime minister Dr Baburam Bhattarai, who chaired the meeting, expressed optimism at the accomplishment of the joint efforts of the Investment Board, the Ministry of Energy and related agencies to develop the PDA template, which will now provide a much needed impetus to enable negotiations on the current four priority projects, that will produce 3000 MW of electricity.
“Harnessing Nepal’s hydro resources for Nepal’s socio-economic transformation has always been my number one economic priority,” said Bhattarai, adding that the new PDA template will now equip Nepal with the capability to negotiate good hydropower deals and ensure maximum benefits in terms of revenue, spending, industrial and employment benefits, and electricity.
“I would also like to assure investors that work on their projects will go unhindered,” he added, asking the investors to invest. “Nepal is open for business and the current political uncertainty will not affect Nepal’s economic activities.”
Due to lack of power — the engine for economic growth — the country is facing huge unemployment problems.
The new PDA template comes as a response to the previous PDA model that was rejected by developers and financiers in 2010 for not being bankable, according to chief executive of the board Radhesh Pant.
“The new template protects the interests of both the people and investors,” he said, adding that it will also ensure fair returns for investors to enable them to get financing at competitive costs, timely approval mechanism, and provide for due diligence oversight to ensure commitments are met.
It has also included best practices of international environmental and social standards, and will ensure model community benefits package and fair resettlement and rehabilitation though it is only an agreement template. But the individual agreements will also be negotiated and tailored to project circumstances and economics, local community needs and aspirations, he added.
The new template will currently be applicable to the four mega hydro projects — Tamakoshi III (650MW), Upper Karnali (900MW), Upper Marsyangdi (600MW), and Arun III (900MW).
“With the approval of the PDA template, we are now on a fast track to move on project agreements that will unlock the country’s vast hydro potential and solve the load shedding problem,” said Pant, adding that the board will present the PDA template to key developers in the next few days to enable both sides to lay the groundwork for intensive negotiations.
He also assured the developers that the board will be approaching the negotiations in a constructive and cooperative manner.
“We have the opportunity to bring in $6 billion in foreign direct investment, and create new opportunities for Nepali businesses and the labour force,” the chief executive said, adding that it not only solves the load shedding problem, but also addresses the country’s biggest obstacle to investment, business development and economic growth.
The Investment Board, as a leading agency representing the government, was set up in November 2011 as a one-window solution for foreign investors and developers investing in hydro projects above 500MW and other infrastructure projects above Rs 10 billion to fast track projects and cut through bureaucratic obstacles and delays.
Source: THT
