Nepal and GMR Consortium of India likely to sign Power Development Agreement soon

KATHMANDU: Nepal and the GMR Consortium of India are likely to ink first Power Development Agreement (PDA) between the two countries next month, a senior official said today.

All necessary preparations have been completed for signing the PDA between Nepal government and the GMR around mid-September, CEO of Nepal Investment Board Radesh Panta said.

The Investment Board is a government entity for facilitating foreign investment in the country.

During the recent visit of Prime Minister Narendra Modi, Nepal and India had signed a deal which envisages to sign the first Power Development Agreement between Nepal and India within 45 days.

GMR is developing the $1.5 billion 900 MW Upper Karnali Project, which is the largest hydropower project being developed so far in Nepal.

Nepal will receive 12 per cent free electricity as well as 27 per cent free equity investment from the GMR in the project as per the proposed PDA, Panta told Kathmandu based foreign journalists.

The construction of the project is scheduled to be complete by 2022 and the project will be handed over to the government of Nepal after 25 years of operation.

Similarly, the works for preparation of Power Development Agreement for the 900 MW Arun III hydropower project being developed by Satluj Jalavidyut Nigam (SJVN) of India is likely to be completed within the next 2-3 months, Panta said.

The cost of this construction project also stands at $1.5 billion.

The signing of the PDA with GMR will pave way for the development of bigger hydropower projects and more foreign investment will be attracted in hydropower sector, Panta added.

As per the draft PDA, the energy to be produced from these two projects is subject to export to India, after meeting domestic needs of Nepal.

Nepal currently produces around 700 MW of electricity, which is mere one per cent of its total hydro potentiality of 83,000 MW.