“The WB is interested in supporting the construction of the main Dhalkebar-Muzaffarpur line. We are positive in this regard,” Minister for Energy Dr Prakash Sharan Mahat told myrepublica.com.
He, however, added that any agreement in this regard is contingent on India´s nod as it involves approval from both the governments. “Any deal with the bank needs India´s agreement as well. We are hoping to strike a deal with the Indian side as well,” Mahat said.
Minister Mahat also informed that the WB had evinced such an interest also during the video conferencing held between the Nepal government and the bank officials last month. He said the loan assistance will be decided upon the agreement on the modality of the project. “First we have to agree on the modality of involving the multilateral institution, following which the details will be decided,” the Minister said.
The total length of the project is 145 km with 45 km in Nepal and another 100 km in India which would have a capacity to carry about 1400-1500 MW power.
The WB some four months back had agreed to only provide technical assistance to support the synchronous operation of the project and also agreed to pay for the technicians hired for the purpose.
Although the proposal may be lucrative to the government, the Nepal Electricity Authority (NEA) officials project a lot of problems in reaching an agreement because of the presence of two separate companies in the project. The two countries have in place two joint-venture companies formed for the implementation in the respective territories.
The CPTC (Cross Border Power Transmission Company) for the Indian side was set up in December 2006 (100% owned subsidiary of IL&FS, the Indian infrastructure developing company, with a provision for equity participation from NEA 26%, power grid 26%, Power Trading Corporation of India 11% and others) and PTCN (Power Transmission Company Nepal) for Nepal side was set-up in September 2007 (50:50 JV company of NEA and IL&FS with a provision to divest 24% of IL&FS equity to foreign investments and banks of Nepal).
“How the WB can grant a direct loan for the project is a difficult proposition. Also, the Indian Power Ministry has already sanctioned $13.4 million soft loan for the construction of the line in Nepal´s side,” a NEA official said. The source added that in India there is no system of granting easy loan and that is the main problem faced by the private sector there, which is now asking for ´special´ consideration from the central government in India.
“And ultimately the project can advance only on the basis of conformity from the system planning as the World Bank too will seek the Power Purchase Agreement if it has to grant loan for the project. It would be better if the loan is directed at strengthening the internal grid instead,” he added. The World Bank gives two types of loan. One directly to the states and the other as private loans given to the private companies.
akanshya@myrepublica.com
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