Investment Board Nepal (IBN) is considering making a second deadline extension for the Indian developers of the Upper Karnali and Arun 3 hydropower projects to complete financial closure after they asked for extra time to arrange funding.

The two Indian companies, SJVN Arun 3 Power Development Company (SAPDC) and GMR Upper Karnali Hydropower Project, have requested extensions of six months and one year respectively.

The financial closure deadline for Upper Karnali expires on September 18 and the last date for Arun 3 is September 30. The projects have an installed capacity of 900 MW each, and the developers have said that they need more time due to their large size. They applied to IBN more than a month ago.

On Wednesday, the Indian developers also met with officials of the High Level Committee for Implementation of Arun 3 and Upper Karnali Project which is headed by National Planning Commission Chair Swarnim Wagle and explained why they needed a deadline extension.

“As GMR plans to export the electricity generated by the Upper Karnali hydropower project to India and Bangladesh, it is waiting for the Indian government to issue regulations on cross-border electricity trade. The Indian developer said that the sooner this happens, the sooner it will be able to complete financial closure,” said an IBN official who was present at the meeting.

“GMR said it would take two to three months to sign a power purchase deal after the regulations are released, and another two to three months to complete financial closure after that.”

Meanwhile, SAPDC which has asked for a six-month extension said it would lengthen the gestation period of the loan, according to the IBN source. “According to SAPDC, arranging funds to construct the project will not be very difficult for them as the company is owned by the government, and any state-owned bank will readily issue a loan,” said the source.

The board is agreeable to extending the deadline, but has not decided by how much. “We will first consult with the high level committee and present its recommendation to the IBN

board of directors which will make the final decision,” said the source.

This is not the first time that IBN has pushed back the deadline for financial closure for the Indian developers. Last January, the board extended the time limit after the two companies said that the devastating earthquake, fuel crisis due to unrest in the Tarai and delays in forest clearance had delayed work.