Power export will end trade deficit situation

By A Staff Reporter,Kathmandu, Sept. 20: Governor of Nepal Rastra Bank (NRB) Maha Prasad Adhikari has said that the trade deficit situation will be brought to an end by exporting electricity worth Rs. 1,200 to Rs. 1,300 billion annually from Nepal.

During a meeting with the Independent Power Producers Association, Nepal (IPPAN) on Monday, Governor Adhikari said that annual export of electricity worth around  Rs. 1,200- Rs. 1,300 billion would be possible and that there would be no problem in investing in the hydropower projects that need to be developed to export that amount.

In the meeting, IPPAN President Ganesh Karki said that the bank was unable to invest in power projects and asked the governor to make arrangements for the banks and financial institutions to invest at least 20 per cent of their total investment in the energy sector.

In response, Governor Adhikari said that there was no investment problem with the bank. “Even if you generate 20,000 MW power in 10 years, there will be no investment problem,” he said.

According to IPPAN, about Rs. 555 billion will be needed to develop hydropower projects with a capacity of about 3,700 MW  in the next five years.

If the country produces an additional 25,000 megawatt of power as per the Energy Decade Announcement of the government, more than Rs. 3,750 billion of investment will be required, the IPPAN said.

As the NRB is managing to provide loans to projects larger than 200 megawatts by adding only 1 per cent to the base rate, the IPPAN has requested the NRB for the proper implementation of the provision in all hydropower projects.

In order to meet the national goal of producing 25,000 megawatts and exporting 15,000 megawatts in 10 years, the IPPAN asked the NRB to ease the guidelines so that the banks and financial institutions can invest in the form of capital.

Similarly, it has requested the NRB to make the policies and rules related to hedging, investment and dividend and investment return easy, fast and transparent for international investors.

The IPPAN has requested that the risk weight of hydropower projects is fixed at 100 per cent in the integrated guidelines of NRB, and it should be reduced to 50 per cent for the projects that are in operation and 75 per cent for the under-construction projects.

It has also requested Governor Adhikari to make necessary policy arrangements, including interest subsidy/re-loan, interest capitalisation, loan restructuring and moratorium period to complete the reconstruction and construction of the hydropower projects damaged by the devastating floods and landslides and to prevent these projects from becoming sick.