A Korean state-owned hydropower project developer has expressed interest to partner with GMR Upper Karnali Hydropower Limited to develop 900 MW Upper Karnali Hydropower Project.
The officials of K-water, a Korean government-owned corporation, were recently in Nepal to take stock of the 145-billion-rupee project. The team, which left Nepal on Sunday, was very positive about becoming an equity partner in the project, according to a source at GMR Energy, the major investor in the project.
“The recent field visit by the probable partner went very well. They visited both the dam and power house sites and were very positive about the project,” said the source. “There is high chance of sealing the deal soon.”
GMR Energy is willing to offer 30 percent stake in the Upper Karnali hydropower project to K-water, according to multiple sources. If the Korean developer agrees to become an equity partner, it would provide relief to cash-strapped GMR which is currently struggling to arrange funds to build the project.
If the Korean company agrees to inject capital in the project, the fund could be used to settle payments of private landowners of Achham and Dailekh districts whose land is being acquired to develop the project.
The project developer has to acquire 1,000 ropanies of private land at the rate of Rs805,000 per ropani. It has three months to complete the process of pooling the private land. The developer will need around Rs800 million to settle the payments of private landowners.
The project developer also needs to complete the project’s financial closure by mid-September 2017 as per the extended deadline given by the Investment Board Nepal (IBN). Partnership with the Korean company will help the project developer to win the trust of the probable lender and complete the financial closure on time.
The IBN and GMR Energy had signed a project development agreement (PDA) in September 2015 for the construction of the project which spreads in three districts–Surkhet, Dailekh and Achham.
As per the PDA, the project developer will provide 27 percent of the project’s shares to the Nepal government and 12 percent (108 MW) of energy free of cost. The project is also expected to provide jobs to more than 2,000 people, and the government is projected to earn financial benefits to the tune of Rs300 billion.
The project will be acquiring 48.85 hectares of private land and 207.75 hectares of government-owned land. It will affect an estimated 239 households, of which 46 have to be provided rehabilitation schemes. The construction of the project is expected to be completed within five years of reaching the financial closure.