Investment modality ready for 454 MW Kimathanka Arun Hydro Project

By A Staff Reporter,Kathmandu, Jan. 7: An investment modality has been prepared to construct the 454 MW Kimathanka Arun Semi-Reservoir Hydropower Project using domestic capital.

The project, identified at Bhotkhola Rural Municipality–2 of Sankhuwasabha district, is estimated to cost Rs. 97.94 billion, including interest during construction period. 

The project will be carried out by the Electricity Generation Company, whose founder is the government and government agencies. 

According to the proposed financial structure, 70 per cent of the total cost—Rs. 68.55 billion—will be mobilised through loans, while the remaining 30 per cent—Rs. 29.38 billion—will be raised as equity. 

It has been proposed to take a loan through co-financing of Hydroelectricity Investment and Development Company HIDCL, Employees Provident Fund, Citizens Investment Fund, Social Security Fund, insurance companies and banks and financial institutions.

The amount received from equity will be collected by issuing shares to the company's promoters and non-resident and foreign-employed Nepalis, local residents of the project-affected districts, members of extremely poor families and the general public.

While reviewing the proposed investment modality prepared along with a financial analysis, Minister for Energy, Water Resources and Irrigation Kul Man Ghising instructed officials to update the project’s estimated cost accordingly and immediately proceed with the financial management process. 

Stating that the Electricity Generation Company holds licences for several projects but has not yet been able to move into construction, the Minister said that implementing the Kimathanka hydropower project on its own is essential for the company’s long-term income and sustainability. 

Ghising directed the company's board of directors to immediately approve and submit the proposed investment framework of the project and the company's institutional equity plan accordingly.

A total of Rs. 731.4 million has already been spent on studies and pre-construction works.

Land acquisition for the project office and staff residential camp has been completed, while compensation for land required for the dam, reservoir, powerhouse and other structures has been determined. 

Around Rs. 450 million will be required for this purpose.

The project is expected to generate 2.69 billion units (2,690.97 gigawatt-hours) of electricity annually. 

Of this, winter peak and off-peak generation will account for 473.1 million and 353.3 million units respectively, while monsoon season generation will be 1.86 billion units. 

Annual revenue from electricity sales is estimated at Rs. 16.91 billion.

The government owns 30 per cent of the promoter shares in the Electricity Generation Company, Nepal Electricity Authority, Employees Provident Fund and Nepal Telecom own 10 per cent each, Citizens Investment Fund owns 5 per cent, HIDCL owns 4 per cent, and National Life Insurance Company owns 2 per cent. 

Similarly, a total of 29 per cent of the shares have been allocated to the general public.