GMR Group Signs Agreement With Nepal For 900MW Hydro Project

The GMR Group today said that it has signed a Project Development Agreement for 900 MW Upper Karnali Hydro Power project with the Nepal government. The cost of the project is estimated to be around USD 1.5 billion.

The agreement, which is a major milestone for the project, was signed on Friday after due approvals of the Board of Investment, Board of Nepal and the Cabinet of Government of Nepal, a statement from GMR said today. The financial closure of the project (long-term tie-up of debt and equity capital) is expected to be achieved by September 2016 and the commercial operation of the project is expected to start by September 2021.

GMR Group will be exploring a strategic long-term capital tie-up, both debt and equity, for the project at an appropriate time, the company said in a statement. “The agreement, which is a major milestone for the project, was signed after due approvals of the Investment Board of Nepal and the Cabinet of Nepal. This is the largest FDI for Nepal and also the largest investment for GMR Group outside India,” GMR said.

The Upper Karnali Hydro Power project was awarded to the GMR Group through an international competitive bidding process in 2008 on build, own, operate and transfer (BOOT) basis. The project, with a capacity of 900 MW, is being developed as an export-oriented project to be constructed in a period of about five years.

The project is expected to generate about 3500 MUs of energy annually and 420 MUs of energy (12 per cent of installed capacity) has been earmarked as free power to Nepal.

The Nepal Electricity Authority will hold 27% free equity stake in the project including all project royalties and the 100% ownership of the project will be transferred to the government of Nepal at the end of the 25-year concession period.