WB finances $46m for Kabeli hydro project in Nepal

The Government of Nepal and the World Bank (WB) have signed a $46 million loan and grant agreement for the Kabeli Hydroelectric Project.

Of the total funding agreed, $40 million is loan and $6 million is grant, which will be used for developing the institutional capacity of the Department of Energy Development (DoED) and strengthening the capacity of Investment Board Nepal for preparing and negotiating power development agreements (PDA) with large project investors.

The loan component will be used for developing the 37.6 MW hydroelectric project.

Although the WB had pledged the loan for the project last May, the signature of the agreement was delayed due to the government’s insistence that $6 million be grant.

The project which is being developed by Butwal Power Company will be responsible for bearing the foreign exchange risk of the loan. Butwal Power Company (BPC) is one of the leading companies in Nepal’s power sector with generation and distribution as its core business areas.

The hydropower project is located on the Taplejung-Panchthar border in eastern Nepal and is expected to be completed by June 2019.

International Finance Corporation (IFC), the private sector arm of the World Bank, is also making an investment of $38.12 million as equity partner in Kabeli while Kabeli Energy Limited will invest $22.96 million as equity investor. The total cost of the project is $102.08 million.

Additinally, the International Bank for Reconstruction and Development (IBRD) of the World Bank has agreed to provide a $79 million grant for the implementation of the Extended Biogas Project in Nepal. The funding agreement was also signed on Monday.