China agrees to fund 1,200-MW HPP in Nepal

12 September 2017 Week 36 Issue 424

China has agreed to fund the development of the 1,200-MW Budhi Gandaki HPP in central Nepal as part of its ambitious Belt and Road Initiative (BRI).

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BRI is a signature foreign policy initiative of Chinese President Xi Jinping, which supports varied overseas infrastructure projects.

The project developer –China Gezhouba Group of Corporation (CGGC) – said that the Chinese financial institutions would lend to the HPP on a “priority” basis following the inclusion of the project in BRI.

CGGC executive vice-president Ma Yingying last week said that Chinese financial institutions would provide loans for the project under the terms and conditions acceptable to the Nepal government.

The Chinese company, in June, signed a memorandum of understanding (MoU) with the Nepalese government for the development of the Budhi Gandaki project, with an estimated investment of US$2.5 billion, using the engineering, procurement, construction and finance (EPCF) model.

According to the MoU, CGGC will help arrange US$1.8 billion of funding to develop the project and undertake the overall responsibility for executing it.

Financing will be mobilised in the form of soft or commercial loans from Chinese financial institutions.

The storage-type HPP will be developed on the Budhi Gandaki River in central Nepal, about 2 km upstream of the confluence of the Trishuli and Budhi Gandaki Rivers and 80 km west of Kathmandu.  The 1,200-MW HPP will be able to generate 3.4 billion kWh per year.

The energy ministry sees the Buddha Gandaki project as crucial to solving the perennial power supply shortage in the country, which is estimated to be over 600 MW.

It is said that the project will not only solve the power shortage in the major demand centres like Kathmandu but help the country to export power to the southern neighbour India.

The Nepalese government is seeking global investors in development of hydro projects as part of a plan to add 10,000 MW of hydro capacity to the current 760 MW by 2025.

Edited by

Richard Lockhart

Editor

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