SJVN to borrow from Nepali banks for Arun
8 April 2015 | Karobar
KATHMANDU, 7 APR: Satluj Jal Vidyut Nigam Limited (SJVN) of India will also borrow from Nepali banks to construct the 900-MW Arun III Hydropower Project. SJVN has written to 30 commercial banks of Nepal and the government-owned Hydropower Investment and Development Company Limited (HIDCL) and asked them to submit proposal by this Friday. It, however, has not revealed the amount of money that it wants. Country representative of SJVN Hariram Subedi says banks have been asked to submit the amount they can invest, interest rate and loan period. He adds discussions will be held with banks after they submit their proposals. He reveals SJVN has started the process of taking loans from Everest, SBI and Standard Chartered banks that said they are ready to invest on Arun III. “We have asked for proposal for gap loan from 30 commercial banks and HIDCL feeling that we should borrow from everyone. We are awaiting their proposals,” he states.SJVN will take bridge loan of around Rs 4 billion from Nepali banks. The project cost, according to study, is Rs 196 billion including the cost of constructing transmission line. SJVN will make equity investment of 25 percent (Rs 29 billion) and loan investment of 75 percent (Rs 87 billion) as per the investment structure for the project.
SJVN is also holding discussions with Power Finance Corporation (PFC) of the Indian government for loan investment. PFC has already agreed in principle to invest Rs 75 billion. Subedi says discussions are also being held with State Bank of India and Punjab National Bank. He argues there will not be any problem in making investment arrangements and finding market for the generated electricity as SJVN is a government institution. Prequalification of companies bidding for construction of dam under the first lot of civil construction will be done from coming September. SJVN has already started acquisition of 180 hectares of land in cooperation with the Investment Board (IB). The project development agreement (PDA) signed between the IB and SJVN states that the government will assist in land acquisition. SJVN will have generation license for 25 years. Nepal will receive benefits worth Rs 348 billion during those 25 years through free electricity, tax and other benefits. SJVN aims to make investment arrangements within two years of signing PDA, complete pre-construction works including making market arrangements for the electricity to be generated, and complete the project by 2021. The locals affected by the project will be allocated six percent (8 million units) shares. The company will also carry out free electrification of six village development committees (VDC) affected by the project.
Nepal will receive 21.9 percent (118 MW, 860 million units a year) of free electricity from the project. The detailed project report (DPR) has showed that the project will generate 3.92 billion units of electricity annually. The company will get value-added tax (VAT) grant of Rs 4.50 billion, complete waiver of taxes for 10 years and 50 percent waiver for the next five years if the project is completed by 2023. SJVN was awarded the project in 2008 after a free competition when it proposed to give the highest quantity of electricity. It has already prepared the DPR and the environmental impact assessment (EIA) and submitted them to the government in the six years. Resettlement will be done as per the standards set by the World Bank (WB) and the International Finance Corporation (IFC). The project will be developed on Arun river that separates Sankhuwasabha and Bhojpur districts. The dam will be built in Num and Pathibhara VDCs, and the power house in Dijing VDC. An 11-kilometer tunnel will be constructed from the dam to power house.