GMR Energy Limited, the energy arm of Indian infrastructure major GMR Group, has signed a Joint Development Agreement (JDA) with the International Finance Corporation (IFC), a member of the World Bank Group, to jointly develop the 600 MW Upper Marsyangdi-II hydro-power project in Nepal.
The 600 MW Upper Marsyangdi-II project is located on the Marsyangdi river in the Manang and Lamjung districts of Nepal, some 200 km west from capital Kathmandu, and is already in an advanced stage of development.
The project is being currently undertaken through a Nepalese subsidiary of GMR Energy Limited, Himtal Hydropower Company Pvt. Ltd. The electricity produced by the project will be exported to India.
"The Nepalese government has identified the proposed Upper Marsyangdi-II as one of the National Priority Projects and is being facilitated by the Investment Board of Nepal. The project has completed all survey and investigation work, finalised the feasibility studies and has already received majority of the clearances from the government of Nepal," GMR said a press statement.
A project development agreement (PDA) is expected to be signed early next year. IFC will provide 10 percent of the capital and 15 percent of the total cost in loan for development of the project, according to the agreement.
The project will be implemented in the build-own-operate-transfer (BOOT) model. It aims at a total investment of around $1 billion and is targeted for commissioning by the financial year 2021.
Himtal has already completed the Detailed Project Report (DPR) and the Environmental Impact Assessment (EIA) and submitted these to the energy ministry.
GMR is also constructing the 900 MW Upper Karnali hydro-power project which is also awaiting the PDA with the Investment Board of Nepal (IBN).
G.B.S Raju, chairman of energy business, and G. Subba Rao, chief executive of hydro business of GMR Group were present during the JDA signing ceremony.
"We are pleased to have IFC as our partners in the Upper Marsyangdi-II hydro-power project," Raju said.
"Apart from investing in the company, IFC will also bring its vast experience in financing similar large and complex infrastructure projects, which will add value to the project. We believe that with the continuous support of IBN, both GMR and IFC shall be able to implement this project in an accelerated manner," he added.
Anita George, IFC infrastructure director for Asia, said: "Nepali citizens and industry face severe electricity shortages. The development of hydro-power is a sustainable and responsible way to address this need while creating jobs and other benefits for the community."
According to Radhesh Pant, chief executive officer of IBN, the Nepal government was "hopeful that GMR and IFC teams shall be able to give Nepal the much needed impetus for large scale hydro-power development through development of this project in a world class manner".