KATHMANDU: The government and Manang-Marsyandi Hydro Power Company, the developer company, signed a Project Development Agreement (PDA) to develop 135 MW hydroelectric project.
Manang Marsyandi Hydropower Project will be a joint venture of Nepali and Chinese investments. Three Chinese firms including Butwal Power Company will invest 80 percent of the total project cost. Out of the seven PDAs signed by the government with a foreign company, it is the first PDA for Chinese investment.
In the presence of Dinesh Ghimire, Secretary of the Ministry of Energy, Water Resources, and Irrigation, the PDA was signed between Joint Secretary of the Ministry Madhu Prasad Bhetuwal and Chief Executive Officer of BPC Uttar Kumar Shrestha.
A preliminary agreement was reached between the company and the ministry on June 8, 2021. The company, which got the production license on November 17, 2018, signed a Power Purchase Agreement (PPA) in Nepali currency for the period of mid-March to mid-April one and a half years ago.
Speaking at the PDA signing program, Secretary Ghimire said that a historic agreement has been reached to advance the project, and the company should deliver the project on time with stipulated cost.
Ghimire also said that the government would extend all-out support and facilitation to ensure seamless progress in project implementation while urging them to make a separate action plan for the construction of the project.
Joint Secretary Bhatuwal said the agreement was built on one and a half years of negotiations stating that Nepal’s law will be applied in case of any dispute in the process of project implementation.
“The PDA will also send a positive message to foreign investors,” said Bhetuwal.
BPC’s CEO Shrestha also assured that the project will be completed on time without any cost overrun.
According to Pratikman Singh Pradhan, Deputy General Manager of the company, Financial Closure has been easier with the PDA that envisages starting construction in 2023 with the target to complete by 2026. The PDA has made the project responsible to provide 20 units of electricity per month free of cost to residents of project-affected areas.
The project aims to produce 766.593 gigawatt-hours of electricity annually. The contractor company selected in Engineering, Procurement, and Construction (EPC) will be operational by mid-February.
According to BPC officials, BPC’s equity stake in the $320- million project will be 20 percent, while Sichuan Provincial Investment Group (SCIG) holds 50 percent, Chengdu Xingcheng Investment Group (CXIG) 17 percent, and Kyung Yan Engineering Consulting Company (QYEC) 12 percent of the project’s ownership.
The loan required for the project will also be arranged from a Chinese bank. Compared to the previous PDA, the amount to be paid by the government in the case of force majeure has been reduced in this PDA.