Offers $1b line of credit
KATHMANDU, AUG 04 -
In a gesture of India putting Nepal high on its foreign policy priority list, visiting Indian Prime Minister Narendra Modi on Sunday announced US$ 1 billion soft loan through the Exim Bank of India.
The announcement was made during the bilateral talks headed by Prime Minister Sushil Koirala and his counterpart Modi at the PM’s Office on Sunday afternoon where several Cabinet ministers were present from the Nepali side.
According to Finance Minister Ram Sharan Mahat, the line of credit will be spent on mutually agreed projects like roads and hydropower. “We happily accepted the line of credit,” Mahat said after the meeting.
During the delegation-level talks, the Indian prime minister stressed the need for energy cooperation between the two countries and urged both the sides to expedite works in the area of energy cooperation.
When the issue of signing bilateral power trade agreement (PTA) and the project development agreement (PDA) between Investment Board Nepal and various Indian firms figured during the meeting, Minister Mahat clarified that the Nepali side could not complete the negotiations as it was in a rush.
“On the other hand, we had limited time for political consensus so as to avoid any controversy in the process,” Mahat told the meeting. “We will definitely complete these two pacts within one and a half months.”
After listening to views expressed by Nepali delegates, Modi said he wanted to see tangible progress on PTA, PDA and implementation of the Pancheswor multi-purpose project before the 18th Saarc Summit. “I am coming here again for the Saarc Summit and want to see progress in the energy sector,” a Nepali official present in the meeting quoted Modi as saying.
Nepal will prepare an inventory of projects that are compatible with the Indian soft loan. At present, the Indian line of credit, which started in 2006, stands at US$ 350 million. It has been put in various infrastructure projects like road expansion and construction of transmission lines.
Though new terms are yet to be agreed, on the $350 million loan Nepal pays 1.75 percent annual interest over the capital repayment period of 20 years. In the failure to pay it back on time, Nepal gets 20 more years of grace time.
Fifty percent of the service and goods paid for with the money should be Indian. Also applicable are 0.5 percent commitment fee and 0.25 percent service charge.
“The government of India announced a soft credit line of US $ 1 billion to be used in infrastructure development and energy projects as identified by the government of Nepal,” read a statement issued here by the Nepali side, adding that India has increased the number of scholarships for Nepali students.
The two prime ministers affixed the first cancellation mark on the commemorative cover issued by the Nepal Philatelic Bureau marking the visit of the Indian PM.
The two premiers watched the signing of two memoranda of understanding (on goitre control in Nepal and cooperation between Nepal Television and Doordarshan), and the exchange of ToR letters for the Pancheshwor Development Authority.
At the state banquet hosted by Prime Minister Sushil Koirala later in the evening, Modi reiterated that he was glad to have come to Nepal early in his premiership.
Source: The Kathmandu Post
