Govt asks state-owned entities to invest in planned hydropower bank

KATHMANDU, JUL 05 -

The government has moved another step forward to establish a hydropower development financial company by asking state-owned institutional investors to make investment commitments for the capital structure of the proposed company.

The government had decided to set up such company on June 5 to make funds available for large hydel projects and sought capital investments amounting to Rs 27 billion from three ministries and four institutional investors. The proposed paid-up capital of the company stands at Rs 30 billion.

The Finance Ministry wrote to the Nepal Telecom (NT), the Employees’ Provident Fund (EPF), Rastriya Beema Sansthan (RBS) and the Citizens Investment Trust (CIT) seeking their investment commitment of Rs 9 billion for the proposed financial institution. In the letter sent to them on July 1, the ministry has asked NT to commit Rs 4 billion and the EPF Rs 3 billion. The ministry asked RBS and CIT to commit Rs 1 billion each.

The Finance Ministry has committed Rs 10 billion while the Ministry of Energy and the Ministry of Law have been asked to put up Rs 4 billion each.

The decision to ask them for capital investment was taken on June 30 at the deputy prime ministerial and finance ministerial level.

With a shortage of financial resources always remaining one of the major constraints in the development of hydropower projects, the government had decided to establish such a company.

The policies and programmes of the government presented on Sunday have also mentioned establishment of such a company.

Earlier, the Ministry of Energy had sought an allocation of Rs 15 billion from the government as seed money for the bank in the next fiscal year’s budget.

Institutions which have been expected to invest in the proposed company are also positive to the government’s request but are sceptical. But they are yet to take any decision on the matter.

EPF administrator Ramesh Bhattarai said they were very much interested in investing in the proposed company as it could pay dividends within the next six years.

“We have taken the government’s proposal as an important opportunity for us to increase our equity investment to 3 percent of our total portfolio,” he said. It has mobilised financial resources of Rs 86 billion . The EPF board will discuss the matter on Tuesday.

The EPF is in the process of providing Rs 26 billon in loans to different hydropower projects. It has already signed a loan agreement of Rs 10 billion with the Upper Tamakoshi Hydropower Project.

It recently signed a memorandum of understanding (MoU) with the Chilime Hydropower Project to finance Rs 16.05 billion for the project including Sanjen, Upper Sanjen and Rasuwagadhi being developed by Chilime.

Bhattarai said that he didn’t find any possibility of political intervention in the company if its memorandum and articles of association are followed properly.

The CIT is also positive to the government’s request but doubtful whether the company will be run professionally. “We want to be sure the company will be run by professional human resources before taking any decision on investments,” said Chandramani Adhikari, chairman of the CIT. The CIT board will discuss the government’s proposal on Tuesday.

The board of the proposed bank will consist of the central bank governor, finance secretary and private sector representatives as per the recommendation of the committee formed to prepare the modality of the board.

Nepal Telecom is undecided whether to invest in hydropower projects or not. “We have our own projects in our priority, and we are yet take any decision in this regard,” said Bishwonath Goyal, managing director of NT.

He added that he was unconcerned about other institutions investing in the company.

The proposed company will primarily mobilise soft loans provided by major donors such as the World Bank and the Asian Development Bank.

As per the plan, the bank will provide loans received from the donors at a low interest rate to hydropower developers at a higher interest rate.

Posted on: 2011-07-05 10:23
http://www.ekantipur.com/2011/07/05/business/govt-asks-state-owned-entities-to-invest-in-planned-hydropower-bank/336823.html