NEA enquires about soft loan conditionsNepal Electricity Authority (NEA) has asked for terms and conditions that would accompany the soft loan that China Three Gorges Corporation (CTGC) has assured to arrange for NEA for setting up a joint venture (JV) company for the development the West Seti Hydropower Project.
Nepal Electricity Authority (NEA) has asked for terms and conditions that would accompany the soft loan that China Three Gorges Corporation (CTGC) has assured to arrange for NEA for setting up a joint venture (JV) company for the development the West Seti Hydropower Project.
Senior officials from NEA and CTGC are currently holding talks on the JV agreement.
Although CTGC has assured NEA to help in getting $400 million in soft loan from Chinese banks, it has not stated the exact time by which the soft-loan deal would be done.
Officials involved in the talks said NEA wanted to be sure that CTGC would arrange the necessary funds. “We have raised a question that if CTGC fails to arrange the loan, how will NEA finance the JV company?” said one of the NEA officials present in the meeting. “Likewise, what would be the case, if the terms and conditions of the loan arranged by CTGC are not agreeable to NEA.”
NEA has expected to get the terms and conditions of the loan from CTGC before the JV agreement is signed. “However, we are hopeful the agreement will be signed very soon,” said Sher Sing Bhat, deputy managing director of NEA.
As per the memorandum of understanding (MoU) signed between Investment Board Nepal (IBN) and CWE Investment Corporation, a subsidiary of CTGC, in August 2012, the Chinese company will have a 75 percent stake in the JV company, while the NEA will hold the rest.
Senior officials of CTGC are in Nepal since Friday to finalise the JV agreement ahead of Prime Minister KP Olis’s visit to China that begins on Sunday.
Yao Sexiong, general manager of CTGC’s investment department, and Sylvia Li, CTGC’s business manager represented the Chinese company, while Bhat and senior NEA officials Gokarna Sharma, Jagdishwar Singh and Anil Ratna Tuladhar represented NEA in the meeting facilitated by the IBN.
Despite getting a draft of the JV agreement from CWE some nine months ago, IBN has been struggling to seal the deal due to NEA’s reservations. The state-owned power utility body cited lack of resources and a need to study the country’s power demands when the hydro plant is projected to be completed.
As NEA is the sole power buyer, it is worried about possible losses due to surplus electricity. However, NEA has shown greater interest in the project lately.
The West Seti project is estimated to cost $1.6 billion. In April 2014, the Finance Ministry had written to the Chinese government asking for $400 million in soft loans to allow the NEA to be an equity partner in the JV company and build a transmission line to evacuate the power generated by the plant. But no headway has been made on this front.