Power developers´ funding woes to ease
KATHMANDU, June 5:
The cabinet today endorsed the proposal to establish a separate financial institution focused on hydro project development — especially in relation to provision of loan.
The cabinet okayed the proposal submitted by the Finance Ministry upon request of the Energy Ministry for establishing the Electricity Development Corporation. “Many projects in the implementation phase have not yet kicked off due to financial problems. So this corporation will lend to power developers,” said Gokarna Bista, Minister for Energy.
According to Bista, the government will allocate Rs 5 billion as seed money and after dealing with interested promoters, about Rs 10 million will be collected as basket fund. The institution will be launched with initial fund of Rs 15 billion.
The cabinet formed a six-member committee led by former water resources secretary Surya Nath Upadhyay with secretaries from the Energy, Finance and Law ministries and the Prime Minister’s Office and governor of Rastra Bank as members.
“The committee will come up with concrete plan on structure of the institution and its working model, after which the government will decide on the fund to be managed at the time of establishment,” said Minister Bista.
According to the Energy Ministry, the institution will also mobilise funds that will be received as soft loans at low interest from various countries or institutions such as ADB and World Bank and invest on projects or provide loan to developers.
It may also invest on the equity portion of the share that will be received by the government, which will help developers manage funds for hydel project construction.
Though the decision was to establish Electricity Development Corporation, an alternative name could be Electricity Development Bank. “A financial institution will be established, but whether it will be a bank or a finance institution, will be decided after recommendations from the committee formed today,” added Bista.
After completion of survey work, many hydel projects have failed to make financial closure for project construction. A case in point is West Seti Hydro project, which after completion of detailed project study failed to manage funds and had to finally withdraw from the project. Most domestic license holders face this problem. “The interest on loan from commercial banks is high, but this institution will provide loan at lower rate,” said Bista.
The institution will have authority to decide on the loan and will be a separate body unlike Nepal Electricity Authority, which works under the Energy Ministry. “It will be an autonomous body dealing with financial matters and will coordinate with various government agencies, international investers, and donor agencies,” Minister Bista added.
Source: THT
The cabinet today endorsed the proposal to establish a separate financial institution focused on hydro project development — especially in relation to provision of loan.
The cabinet okayed the proposal submitted by the Finance Ministry upon request of the Energy Ministry for establishing the Electricity Development Corporation. “Many projects in the implementation phase have not yet kicked off due to financial problems. So this corporation will lend to power developers,” said Gokarna Bista, Minister for Energy.
According to Bista, the government will allocate Rs 5 billion as seed money and after dealing with interested promoters, about Rs 10 million will be collected as basket fund. The institution will be launched with initial fund of Rs 15 billion.
The cabinet formed a six-member committee led by former water resources secretary Surya Nath Upadhyay with secretaries from the Energy, Finance and Law ministries and the Prime Minister’s Office and governor of Rastra Bank as members.
“The committee will come up with concrete plan on structure of the institution and its working model, after which the government will decide on the fund to be managed at the time of establishment,” said Minister Bista.
According to the Energy Ministry, the institution will also mobilise funds that will be received as soft loans at low interest from various countries or institutions such as ADB and World Bank and invest on projects or provide loan to developers.
It may also invest on the equity portion of the share that will be received by the government, which will help developers manage funds for hydel project construction.
Though the decision was to establish Electricity Development Corporation, an alternative name could be Electricity Development Bank. “A financial institution will be established, but whether it will be a bank or a finance institution, will be decided after recommendations from the committee formed today,” added Bista.
After completion of survey work, many hydel projects have failed to make financial closure for project construction. A case in point is West Seti Hydro project, which after completion of detailed project study failed to manage funds and had to finally withdraw from the project. Most domestic license holders face this problem. “The interest on loan from commercial banks is high, but this institution will provide loan at lower rate,” said Bista.
The institution will have authority to decide on the loan and will be a separate body unlike Nepal Electricity Authority, which works under the Energy Ministry. “It will be an autonomous body dealing with financial matters and will coordinate with various government agencies, international investers, and donor agencies,” Minister Bista added.
Source: THT
