Doesn’t look cheap as it seems.

HIDCL is expecting to get $50 million soft loans from ADB. I had been to HIDCL recently and met the high ranking officials to discuss their plans regarding the ADB loan.

ADB provides soft loan at about 1 to 2 percent. The loan is dollar denominated loan and HIDCL will utilize the money in hydropower development, obviously.

However, the cheap fund will not be that cheap as it seems to the end customers. HIDCL will add its margin and forex risk on top of the soft loan. This will make the interest rate at par with the commercial loan.

I guess, it is going to be a huge blow for many developers who are thinking to utilize the ADB’s soft loan from HIDCL.

Anyways below is the news published in eKantipur.

HIDCL expects $50 million in soft loans from ADB

KATHMANDU, AUG 12 - Hydroelectric Investment and Development Company Limited (HIDCL) has said it expects to get a concessional loan of $50 million from Asian Development Bank.

The government-owned company has so far mobilised domestic resources although its memorandum of association allows it to mobilise international resources to finance in the hydropower sector. According to the company, the move is aimed at raising its fund size.

“We have clarified and commented on the compliance-related documents sent by the ADB as a pre-requisite get the soft loan,” said HIDCL CEO Deepak Rauniyar. “We expect that the loan negotiations will begin soon.” He said the Finance Ministry would negotiate to secure the loan for the company. The ministry, however, said there has not been advanced-level bilateral discussions on the matter.

“There had been talks about securing the loan for HIDCL, but there has not been significant development yet,” said Hari Pandey, under secretary at the ministry.

HIDCL expects the approval of the ADB loan would help enhance its credit rating internationally indirectly. “Once the loan is agreed, it will help us get finance from other international financial institutions as well,” said Rauniyar.

The Post’s efforts to contact ADB’s Country Director Kenichi Yokoyama could not materialise on Thursday.

HIDCL is handling the lending arrangement for the US$40 million committed by the World Bank to 37.6MW Kabeli Hydropower project being developed by Butwal Power Company. “The trust of these two global lenders will definitely help to gain trust of other international institutions too,” said Rauniyar.

The company formed to develop and finance the hydropower sector has so far made loan investment in nine hydropower projects and made equity investment in two companies, including its subsidiary Remit Hydro Limited and the PTCN, the company which is building and managing the cross-border transmission line on the Nepal side.

Its total fund stands at Rs 8.72 billion and is planning to conduct initial public offering to raise is paid-up capital.

Source:- eKantipur