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PDA in Upper Trishuli -1 Hydropower Project


The Government of Nepal has signed a Project Development Agreement (PDA) with Nepal Water & Energy Development Company Pvt. Ltd. (NWEDC) on December 29, 2016 for Upper Trishuli -1 Hydropower Project of 216MW (UT-1 Project). PDA is a concession agreement for 35 years under BOOT contract.

 

Sinha Verma Law Concern (SVLC) led the PDA negotiation team as a local counsel for the developers, which include Korea South East Power Co., Ltd. (KOSEP/KOEN), Daelim Industrial Co., Ltd., Kyeryong Construction Industrial Co., Ltd., International Finance Corporation of the World Bank Group (IFC) and local partner Mr. Bkesh Pradhanang. Mr. Mahesh Kumar Thapa, Managing Partner of SVLC, took a part throughout the negotiation.

 

KOSEP/KOEN is a government utility company of Korea. Daelim and Kyeryong are the renowned international contractors based in Korea.

UT-1 Project is the largest hydropower project in Nepal that the Government has signed a concession agreement for domestic consumption of power. The project cost would be USD 550 million of which 75% would be a project loan syndicated by IFC and remaining 25% would be an equity investment from the developers.

 

The Government has signed 2 concession agreements in September 2014 for export projects. Mr. Thapa, Managing Partner of SVLC, was also engaged as the local counsel for the developer, GMR Energy, in the negotiation for concession agreement for Upper Karnali hydropower project of 900MW, one of these two large export hydro projects of the same size.

 

International developers of the power projects are watching carefully the latest development in the hydro projects in Nepal. Signing of concession agreements to award the projects with certain commitments and undertakings from the Government in a series of one after another for hydro projects in a short period of time has been taken as a welcome for foreign investment in this sector. It is a good gesture of the Government that the hydropower has a big potential in Nepal to serve as an opportunity for investment by the foreign investors.

 

Ministry of Energy of the Government of Nepal has announced an Emergency Plan for 10 years with a focused target to produce 10,000MW electricity in 10 years. Currently total installed capacity of the power plants of Nepal is 856MW. The Government has been working to develop a guideline for foreign currency denominated power purchase agreement for the projects having foreign currency loan component.

By Sinhaverma

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