By A Staff Reporter
Kathmandu, Feb. 10: Indian developer Grandhi Mallikarjuna Rao (GMR) of Upper Karnali has been awarded a letter of intent (LoI) from Bangladesh Power Development Board (BPDB) to purchase 500 MW electricity produced from the project.
At a press conference organised in the capital on Sunday, GMR officials said that the issuance of LoI to the company from the BPDB was another milestone achievement towards the development of 900 MW Upper Karnali Hydropower Project.
“We are happy to share that LoI has been issued by BPDB going through the long decision making process of Bangladeshi government with the involvement of Central Bank of Bangladesh, Finance Ministry and Prime Minister,” said Rajib Misra, Head-Project Integration, GMR Energy.
“The issuance of the LoI has confirmed all the key terms that we are agreed for selling electricity to Bangladesh. It has confirmed tariff structure, capacity, delivery points, currency, governing law among others,” he said. The BPDB has already agreed to import 500 MW electricity at the rate of 7.71 cents per unit for a period of 25 years.
“There are two terms of securities in the LoI, we have to put the bank guarantee worth USD 5 million immediately to be valid until the power purchasing agreement (PPA) is signed and USD 15 million’s long-term bank guarantees after signing PPA which will be valid till the project is complete,” he said.
“Within one to two months we are issuing bank guarantee of USD 5 million and then the process of drafting final PPA document will be started,” Misra said. “We are expecting to sign PPA with BPDB within three months by completing all the processes.”
The Signing of PPA will then be headway towards the financial closure (FC) for the development of the project, he said.
Getting funding is not difficult if requirements for funding of lenders are met, he said, adding that PPA is the minimum condition to forward the proposal to the lenders. Besides, transfer of land ownership of the project area to the project and EPC are also important, he said.
KK Sharma, Project Head, GMR Upper Karnali Hydropower, said that the government of Nepal should take initiative in resolving land related issues in time for paving way in project development.
The project cost of 900 MW mega hydropower project is estimated to be around USD 1.5 billion. As per the PDA signed with GMR, Nepal will receive 108 MW electricity at free of cost. The developer is planning to sell it in India and Bangladesh.
From The Rising Nepal