IFC to Back India's GMR Group's Power Projects in Nepal

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Researched by Industrial Info Resources India (Delhi, India)--Hydropower development in Nepal is set to get a boost with International Finance Corporation (IFC) (Washington DC), a member of the World Bank Group, acquiring stake in 900-megawatt (MW) Upper Karnali hydropower project, developed by India's GMR Group (BSE: 532754) (Bangalore) and two transmission line projects in the Himalayan nation.

The transmission projects will move power from the Upper Karnali and 600-MW Upper Marsyangdi hydropower projects in Nepal. IFC will make investments for the project development and help achieve financial closure for these projects, which have a total investment outlay of $1.7 billion.

IFC has recently signed an agreement with GMR to acquire 10% equity in Upper Karnali hydroelectric project and to lead fund raising for financial closure. GMR plans to start talks with local banks to involve them in the financial closure process.

IFC has also signed two other agreements for acquisition of stake in Upper Karnali and Upper Marsyangdi transmission projects on this occasion. "IFC's financing and global expertise in the hydro sector will help the projects become a game changer for Nepal's hydropower sector and will attract international investors," said G M Rao, Group Chairman, GMR.

"The development of these projects complements the initiatives taken by India and Nepal to establish high-capacity cross-border transmission links to facilitate power trading between the two countries," he added.

"These projects will boost a common energy market in South Asia, create sustainable employment, improve quality of life, and provide reliable and clean energy for local industry," said Vivek Pathak, IFC's Director, Asia Pacific.

Nepal has a significant hydropower potential but less than 1% of it has been developed so far. Only an estimated 45% of the population has access to electricity. Over the last decade, demand for power in Nepal has grown at 9% annually, while supply has not kept pace.

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