Govt, Chinese bank to sign loan pact on Feb. 28

KATHMANDU, FEB 18 -

After a six-year long process, Nepal and China Exim Bank are finally signing a loan agreement for 60MW Upper Trishuli 3A Hydropower Project.

The two sides are scheduled to sign Rs 100 million loan agreement on Feb. 28. An Exim bank team is arriving Nepal on Feb. 26 for the purpose.

The Chinese bank has pledged US$ 200 million for Upper Trishuli and Pokhara Regional International Airport. “But this time, only Rs 100 million agreement will be signed for the production and supervision of the project,” said a Finance Ministry official. “Agreement for rest of the amount will be signed on project basis.”

The two sides will also sign another agreement for transmission line of the Upper Trishuli. Interest rate on the loan is 1.75 percent and repayment period is 20 years with a grace period.

As work on the project has already started with the appointment of contractors, the signing of the agreement will eliminate doubts that that the project might not get enough resources.

Exim is a key lender in East Asian countries and other parts of the world and this is the first time that it is lending in Nepal.

“The advantage of this loan is the bank has not put forth any conditions before us,” said a ministry official.

The Cabinet will have to approve the deal prior to its signing. “The deal will be signed after the next Cabinet meeting approves it,” said a senior ministry official.

Nepal has also requested the bank to provide $1 billon for various projects including Nalsyagugad Hydropower Project. “They are yet to agree in this regard,” said the official.

The government had sought $600 million for the construction of Nalsyagugad Hydropower Project located in the mid-western region. The 400 MW storage-type project requires a 30-km access road to link the powerhouse and district headquarters.

Recently, Sunkoshi hydro project (10MW) has been completed with Chinese grant assistance. Chinese private sector is also eyeing investment in Nepal’s hydropower sector. During the 11th meeting of Nepal-China Non-Government Cooperation Forum held here in September 2010, they had expressed their interest in investing in Nepal’s hydropower sector.

Several Chinese contractors are working in hydropower projects in Nepal. Upper Tamakoshi (456MW), Chamelia (30MW), Kulekhani III (14MW), Trishuli 3A, Lower Indrawati (4.5MW) and Madi (20MW) are some projects in which Chinese contractors are involved.

Similarly, Chinese companies Sinohydro and Hydrochina Corporation are developing Upper Marshyangdi (50MW) and Trishuli 2 (102MW), respectively. According to the ministry, Chinese firms supply equipment to many projects.

Source: http://www.ekantipur.com/2011/02/18/business/govt-chinese-bank-to-sign-loan-pact-on-feb.-28/329776.html, Posted on: 2011-02-18 09:06