Govt intensifies talks with JICA, ADB for Tanahun Hydro

KATHMANDU, Jan 24: The government has intensified negotiations with funding partners to finalize terms and conditions for early development of Tanahun Hydropower Project (140 MW).



"We had a negotiation meeting with Japan International Cooperation Agency (JICA) on Wednesday. We discussed most of the issues related to terms and conditions for soft loan,” Madhu Kumar Marasini, joint secretary at the Ministry of Finance, told Republica.[break]



JICA, which has shown interest to provide soft loan of US$ 180 million for the project, is positive about finalizing the agreement at the earliest, according to Marasini.



“However, the negotiations will be lengthy because of the size of the project and multiple funding partners involved," he said.



Marasini said negotiation meeting with Asian Development Bank (ADB) -- another major funding partner - will be held on January 27. ADB is planning to provide soft loan of $150 million for the project.



“We will discuss terms and conditions of the loan and other related issues with ADB officials in the upcoming meeting,” said Marasini.



Nepal Electricity Authority (NEA) will develop the project. Upon completion, it will be the second largest storage-type project in the country after Kulekhani.



“Hopefully, we will be able to sign loan agreements with both the funding partners within a couple of months," said Marasini.



European Investment Bank (EIB) has also pledged to lend $63 million for the project which was previously known as Upper Seti Hydropower Project.



According to finance ministry officials, other partners, including the government, will fill the funding gap for the project that is estimated to cost around $450 million, as per the revised calculation.



The national pride project based in Byas Municipality will start power generation power by 2020 if the construction works begin as planned in 2014.



"It is yet to be decided how much stake the NEA will hold in the project," an NEA official told Republica. "It will be decided after the government signs agreements with all the funding partners."



Separate teams from ADB and JICA had visited Nepal couple of months back to study the project and hold preliminary discussions with the officials concerned.

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