Nepal’s
hydropower sector could receive US$5 billion assistance from the World
Bank Group alone if the government shows seriousness about carrying out
reforms in the energy sector.
This was revealed by Finance Minister
Ram Sharan Mahat on Friday during a budget review meeting held at the
Finance Ministry. Mahat said that the World Bank has indicated its
willingness to inject $5 billion within the next few years for Nepal’s
hydropower development stating that there will be no dearth of resources
for hydel development if Nepal reforms the sector.
Some of the reforms the donors have
sought are issuance of local currency bonds, restructuring of the Nepal
Electricity Authority, power trade agreement with India and signing of
power development agreement (PDA) with three foreign power developers.
“If these major reforms are taken, billions of dollars will flow in the
energy sector not only from the donors but also from the private
sector,” Mahat said.
According to World Bank/IFC officials in
Kathmandu, the World Bank Group is ready to support Nepal for the
generation of 3,000MW electricity. They say that the onus now lies in
the government to capitalise on the donors’ enthusiasm.
Donors’ willingness to support Nepal to
harness its hydropower potential is not new. However, with the formation
of the new government, there is renewed interest on the part of donors.
International Finance Corporation (IFC), the private sector funding arm
of the World Bank, recently organised a national dialogue titled ‘Nepal
hydropower: from potential to reality’ in the Capital where concerned
stakeholders discussed the impediments in hydropower development and the
way forward.
The two-day event had participation of
leading donors, international investors along with energy secretaries
from India and Bangladesh. According to the IFC, the event was organised
to tap the momentum that has given a hope of political stability
following the formation of the new government.
During the event, the concerns of donors
and international investors were almost the same. Government officials
tried their best to assure both, saying that there is urgency also on
the part of government for reforms.
Nepal Rastra Bank Governor Yuba Raj
Khatiwada has promised that directives on local currency bond would be
issued within two weeks. The IFC, which has long planned to issue Nepali
rupee bonds to invest in Nepal’s infrastructure projects, including
hydropower, has applied to the Ministry of Finance for permission to
issue the bonds.
Once the government okays its proposal,
the IFC will be able to raise the money required by the private sector
for investment in development projects within the country.
The IFC, which has already issued such
bonds in 30 countries, is interested to do so in Nepal. The IFC plans to
issue bonds worth around $500 million.
On the issue of the PDA, government
officials say it will be done within a month. Three foreign power
developers—GMR Energy, Satluj Jal Vidyut Nigam Limited and SN Power—are
currently negotiating with the Investment Board for the PDA.
Source : The Kathmandu Post
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