Investment Board approves new Project Development Agreement template for mega hydropower plants

The Nepal Investment Board (NIB) has approved new Project Development Agreement (PDA) template for hydropower projects above 500MW.

A meeting of the NIB Directors Thursday approved the agreement template drafted by one of the world’s leading legal firms, which “ensures balanced and bankable deals that fully benefit and protect Nepal’s interests”.

Prime Minister Baburam Bhattarai, who chairs the board, expressed optimism at the accomplishment of the joint efforts of the Investment Board, the Ministry of Energy and related agencies to develop the PDA template, which will now provide a much needed impetus to enable negotiations on currently four priority projects, that will produce 3000 MW of electricity, a press statement issued by the Board said.

The PDA template will currently be applicable to the four hydro mega projects- Tamakoshi III (650MW), Upper Karnali (900MW), Upper Marsyangdi (600MW), and Arun III (900MW).

“Harnessing Nepal’s hydro resources for Nepal’s socio-economic transformation has always been my number one economic priority. This new PDA template will now equip Nepal with the capability to negotiate good hydropower deals and ensure maximum benefits in terms of revenue, spending, industrial and employment benefits, and electricity,” said PM Bhattarai.

He further said, “I would like to also assure investors that work on their projects will go unhindered. My message today is clear: Nepal is open for business and the current political uncertainty will not affect Nepal’s economic activities.”

The new PDA template comes as a response to the previous model PDA that was rejected by developers and financiers in 2010 for not being bankable.

“With the approval of the PDA template, we are now on a fast track to move on project agreements that will unlock Nepal’s vast hydro potential and solve Nepal’s load shedding problem,” said Radhesh Pant, CEO of the Investment Board.

Pant said the country has an opportunity to bring in US$6 billion in foreign direct investment, create new opportunities for Nepali businesses and the Nepali labour force. “By taking concrete steps to solve our load shedding problem, we will address Nepal’s biggest obstacle to investment, business development and economic growth,” said he. nepalnews.com