Saturday, 28th February 2015

BPC's subsidiary signs loan agreement with IFC

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Kabeli Energy Limited (KEL), a subsidiary of Butwal Power Company (BPC), has signed a Loan Agreement of US$ 38.6 Million with International Finance Corporation (IFC) in Kathmandu for the development of its Kabeli ‘A’ Hydroelectric Project.

According to a statement, together with the US$ 40 million loan to be provided by the World Bank’s International Development Association (IDA), the total funding facilities available from World Bank Group members for the construction of the Kabeli A project totals US$78.6 million.

Kabeli-A Hydroelectric Project (KAHEP) is a Peaking Run-Of-River (PROR) type project with a peaking reservoir constructed by damming Kabeli River at headworks.  The project is located in Panchthar and Taplejung districts of Eastern Development Region of Nepal.  The water from the reservoir will be diverted through a 4 km long tunnel into a Power House located on the left bank of Tamor River generating 37.6 MW.

The generated power will be evacuated by 80km 132kV transmission line from switchyard located at Power house to the substation in Damak. This project opens up eastern Nepal to the national power grid. The project is expected to commission in 2018 and will have significant development impacts and will help relieve the dire electricity shortage through providing clean power to the people of Nepal.

BPC led Joint Venture (JV)was awarded the development of Kabeli A Hydroelectric Project by the Government of Nepal (GoN) in 2009 through the International Competitive Bidding (ICB) to develop under the Public Private Partnership (PPP) model. Subsequent to this, the Project Development Agreement (PDA) was signed in January 2010 with the Department of Electricity Development (DoED), Government of Nepal (GoN). The project is to be partially funded by the World Bank and partially by the IFC.

The Kabeli A Hydroelectric project is being jointly developed by BPC and Gurans Energy Limited (GEL). Gurans Energy Limited is an investment company jointly promoted by BPC and InfraCo Asia Development Pte. Ltd. BPC and InfraCo are looking forward to completing the remaining project development activities to achieve financial close and commence construction.

This is the first time that we have seen the World Bank and IFC both come together to finance a project implemented by the private sector.

BPC is already working with IFC on the upgradation of its 9.4 MW Andhikhola Hydropower Project which is nearing completion and this signing paves the way for the additional cooperation between the parties in strengthening of hydropower development in Nepal.

The loan agreement was signed by Mr. Uttar Kumar Shrestha, CEO BPC, on behalf of Kabeli Energy Limited and Mr. Valentino S Bagatsing, Resident Representative, on behalf of IFC, added the statement.