Minister Ghising instructs to finalise investment modality of Kimathanka Arun hydel project

By TRN Online, Kathmandu, Jan 6: An investment modality has been prepared to construct the 454-megawatt Kimathangka Arun semi-reservoir hydropower project at Bhotkhola Rural Municipality–2 of Sankhuwasabha, using domestic capital.

The Electricity Generation Company Limited, promoted by the Government of Nepal and government-owned institutions, will develop the project itself. The project carries an estimated cost of Rs 97.94 billion, comprising interest during the construction period. Under the proposed financial structure, the company will mobilise 70 per cent of the total cost—Rs 68.55 billion—through loans and the remaining 30 per cent—Rs 29.38 billion—through equity.

The proposal covers raising loans through co-financing arrangements with the Hydroelectricity Investment and Development Company Limited (HIDCL), Employees Provident Fund, Citizen Investment Trust, Social Security Fund, insurance companies, and banks and financial institutions.

The company will mobilise equity by issuing shares to its promoters as well as non-resident Nepalis and Nepalis working abroad, residents of project-affected districts, members of highly marginalised families, and the public.

Minister for Energy, Water Resources and Irrigation; Physical Infrastructure and Transport; and Urban Development, Kulman Ghising, reviewed the proposed investment modality prepared with financial analysis and directed officials to update the estimated project cost accordingly and immediately move ahead with the financial management process, according to the secretariast of Minister Ghising.

Referring to the fact that the Electricity Generation Company holds licenses for several hydropower projects but has not yet begun construction of any, Minister Ghising said the company must build the Kimathangka project on its own to ensure long-term income and institutional sustainability.

Minister Ghising also instructed the company to immediately endorse the proposed investment framework and the corresponding institutional equity plan through the board of directors and submit them without delay.

The Kimathangka Arun project has already spent Rs 731.4 million on study and pre-construction works. Authorities have completed land acquisition for the project office and staff residential camp. They have also fixed compensation and indemnity rates for land required for the construction of the dam, reservoir, powerhouse and other structures, which will require around Rs 450 million.

The project will generate 2.69 billion units of electricity annually (2,690.97 gigawatt-hours). Winter-season peak and off-peak energy will account for 473.1 million units and 353.3 million units respectively, while monsoon-season generation will reach 1.8646 billion units. Electricity sales will generate an estimated annual income of Rs 16.91 billion.

In the Electricity Generation Company, the Government of Nepal holds a 30 per cent stake, while the Nepal Electricity Authority, Employees Provident Fund and Nepal Telecom each own 10 per cent. The Citizen Investment Trust holds 5 per cent, HIDCL 4 per cent and Rastriya Jeevan Beema Company 2 per cent of the promoter’s shares. The company has allocated 29 per cent of its shares to the public.